Auto components market:Ukraine’s potential & strategic moves
International conference for Ukraine’s automotive industry development AutoPROm
November 4th 2013, Kyiv
Sergiy YevtushenkoHead of InvestUkraine
2
AUTOMOTIVE MARKET OF UKRAINE
3
Passenger car market overview
• Second largest passenger car market in the CIS
• New sales reached 238 thousand units, 15% y-o-y rise, 40% of the 2008 level
• Market growth is expected due to: Low density of cars (191 cars/1000 people) High average age of car (17 years) Growing purchasing power
index
Source: UkrAutoprom
2008 2009 2010 2011 20120
100
200
300
400
500
600
700
-100
-60
-20
20
60
100
600
170 170207
238-72%
0%22%
15%
New passenger car sales, 000 unitsChange, %
4
New passenger car sales
• Strong and growing demand on imported passenger cars
• Value of imported cars – USD 3.3 bn. in 2012
• Largest importers of cars to Ukraine: Russia, Germany, Japan, China, South Korea, UK, Romania, Czech Republic
Source: UkrAutoprom
2008 2009 2010 2011 20120%
20%
40%
60%
80%
100%
42% 36% 33% 29% 21%
58% 64% 67% 71% 79%
Produced locally Imported
5
Major car producers
CKD - complete knock-downSKD - semi-knocked-down
Source: Deloitte & Touche USC
Bogdan12,000 units/year
2
3
Evrokar14,500 units/year
4
KrASZ3,200 units/year
ZAZ40,000 units/year
SKD
1
SKD
CKDSKD
SKD
CKD
6
2012
Auto components manufacturers
450 auto components suppliers, 50 are of foreign origin. Most of the components produced by international suppliers are exported.
7
WHY UKRAINE?
8
Location
Automotive clusters units produced in 2012
• Central Europe* – 3.15 mln
• Russia – 1.9 mln
• Turkey – 0,57 mln
*Czech Republic, Hungary, Poland, Romania, Slovakia
Infrastructure
• 4 international transport corridors
• 18 sea ports
• 11 river ports
• 22 000 km of railways
• 170 000 km of roads
Pan-European transport corridors 2012
Logistics Performance Index (LPI*)
*LPI is an interactive benchmarking tool created and implemented by the World Bank International Trade and Transport Departments, with Finland's Turku School of Economics (TSE).
• Ukraine has moved from 102nd to 66th place in 2 years.
• The most significant progress has been reached in:
ability to track and trace consignments
efficiency of customs clearance process
quality of logistics services
• Ukraine has overpassed Greece (68), Latvia (76), Georgia (77), Russia (95).
1 155 – worst rank2 5 – best score
Source: World Bank
Year 2012 2010
Rank166 102
Score22,85 2,57
Timeliness3,31 3,06
Tracking & tracing3,15 2,49
Logistics competence2,85 2,59
International shipments
2,72 2,79
Infrastructure2,69 2,44
Customs2,41 2,02
Labor
11
Source: KPMG
Ukraine
Romania
Russia
Hungury
Slovak Republic
Poland
Czech Republic
0 200 400 600 800 1000 1200 1400
380
671
836
1073
1108
1157
1374 • Ukraine is very competitive in the costs of labor
• Machinery and equipment construction employs 240,000 people
• Production of electronic and optical equipment employs 150,000 people
Average salaries, USD2012
12
2012
Students in technical schools
300,000 students in technical Universities
13
Processing raw materials scheme
Raw materials
Products
No dutiesNo taxesNo quotas & licensing
Processing within 365 days:
Assembling Disassembling Modernization
Taxes
14
Ukraine
Russia
Slovak Republic
Czech Republic
Poland
Romania
Hungury
Europe average
0% 5% 10% 15% 20% 25% 30% 35%17%
34%
19%
21%
20%
20%Indirect Corporate Individual
Source: KPMG
• Tax rates in Ukraine are lower than Europe’s average
• Among mentioned countries:
2nd lowest indirect tax 2nd lowest corporate tax 4th lowest individual tax
• USD 1.7 bn. of indirect taxes were refunded in 2012
(58% automatically)
Conclusions
15
• Ukraine has high potential for auto components manufacturing
• Current situation confirms an interest from international companies to Ukrainian market
• Ukraine’s strategy is to:
Create efficient auto components market Attract foreign car manufacturers Become a strong member of automotive Eastern
European cluster
Thank you
11 Velyka Zhytomyrska St.03032, Kyiv, Ukraine+38 044 270 63 [email protected]
Sergiy YevtushenkoHead of InvestUkraine
