Ukraine is the third-largest automotive market in Central and Eastern Europe after Russia and Turkey in terms of population. In 2011, the Global Fuel Economy Initiative published a global comparison of auto fuel economy in 21 countries, including Ukraine. Average vehicle stock fuel economy went from 7.75 L/100km in 2005 to 7.76 in 2006, an increase of 0.1% (based on the New European Drive Cycle), featuring on the higher, less efficient end of the fuel economy scale on a global level. In order to align itself to best available technology and the GFEI 4L/100 km global target by 2050, there is a lot of room for efficiency gains in the auto sector in Ukraine..
Average fuel economy and new vehicle registrations, 2005 and 2008
With a population of over 45 million, one of the lowest car ownership densities in Europe and an aged vehicle population, Ukraine’s automotive market has grown continuously since 2003. In 2008, light vehicle sales grew by 15% and reached 623,252 new vehicle sales.
In general, the Ukrainian market favours larger cars. The best selling cars in first four months of 2012 in Ukraine were cars with an engine volume of 1,600 cc. Second place in popularity took power packs with a 1.4 liter - more than 13% of sales. Among the most popular are diesel 2-liter engines, with more than 30% of the market share. This is despite recent rises in the price of fuel.
During 2009, the economic downturn had a severe impact on the light vehicles sector, with a 73.5% drop in sales and an 84.8% drop in production. Russian AvtoVAZ Lada kept its dominant market share, ahead of Daewoo and Hyundai. Foreign brands reached a leading position in 2008, with cheap new cars enjoying increasing popularity. Used car sales, which had stagnated, revived during the global recession.
ZAZ, a closed joint stock company, is Ukraine’s largest car producer and the market leader. The company, founded in 1863 as a producer of agricultural machines, began producing cars under its own label in the 1960s. After the collapse of the Soviet Union, the company entered a joint venture with Daewoo. However, the Korean automotive manufacturer went bankrupt in 2000, and since then, ZAZ has predominantly manufactured a variety of foreign brands under license; its major agreement involves producing Chevrolets for GM. Since 2002, ZAZ has been controlled by UkrAVTO, which is involved in many facets of the automotive business. Overall, the supplier base counts more than 450 players, approximately 50 of which are of foreign origin. Most of the components produced in Ukraine by international suppliers are exported.
Light duty vehicle sales and production (in units) 2006-2009
In 2008, the transport sector accounted for about 11% of CO2 emissions in Ukraine, and within that road transport was 72%.
In 2011, the Global Fuel Economy Initiative published a global comparison of auto fuel economy in 21 countries, including Ukraine. Average vehicle stock fuel economy went from 7.75 L/100km in 2005 to 7.76 in 2006, an increase of 0.1% (based on the New European Drive Cycle), featuring on the higher, less efficient end of the fuel economy scale on a global level. In order to align itself to best available technology and the GFEI 4L/100 km global target by 2050, there is a lot of room for efficiency gains in the auto sector in Ukraine.
Ukraine does not currently have an auto fuel economy standard in place. At the end of 2009 the EU-Ukraine Association Agenda was adopted. Also, for 2010, a list of priorities for action was jointly agreed by Ukraine and the EU. And transport priorities include the following - implementation of EC acquis in transport legislation through development of new comprehensive national transport strategy of Ukraine. To prepare the strategy, the EU actively supported Ukraine by introduction of such projects – Twinning “Support to Transport Policy Design and Implementation in Ukraine” and “Support to the Integration of Ukraine in the Trans-European Transport Network TEN-T”. As a result, sector Ministry and representatives of the EU elaborated a document – Transport strategy of Ukraine for the period until 2020 – that was adopted by the CMU on October 20, 2010.Turkey does not have an auto fuel economy standard, but is likely to eventually follow European standards.
It defined the main development goals for transport sector of Ukraine for the period until 2020. They are:
Upon joining the WTO in 2008, Ukraine cut vehicle import duties and removed import restrictions on vehicles more than eight years old. However, due to the economic crisis, the customs duty for import cars was raised in February 2009 to 23% again.
The total tax burden on the pre-tax value of fuel is 195% for petrol and 134 % for diesel (in 2009).
See 3.5 below.
Ukraine imposed significantly higher registration fees for older vehicles, due to cancellation of import restrictions of vehicles older than 8 years. The registration tax is extremely high for older vehicles thus there are no economic incentives to import old vehicles in Ukraine. A vehicle that is older than 8 years is subject to registration fees 30 times higher than an imported vehicle 8 years or newer. Excise taxes are lower for vehicles with smaller engine volume and lower CO2 emissions.
Owners of the vehicles produced in former Soviet Union countries and registered on the territory of Ukraine before 1991 have 50% tax relief on the transport tax.