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, %
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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.
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WHY UKRAINE?
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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
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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
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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
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• 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