In 2023, martial law continued in Ukraine, which had a serious impact on the automobile market. The territory of the car market has decreased significantly compared to previous years, reflecting the consequences of military operations in zones of active military conflicts. Due to this, automotive market dynamics and buyer behavior varied significantly depending on the region. In zones closer to military operations, there was a noticeable slowdown in car purchase and sale transactions. Unlike 2022, this year there have been no significant changes in the automobile market due to external factors. Tax laws for the auto segment remained unchanged, foreign exchange rates fluctuated within narrow limits, and other rules regarding the import, operation and resale of vehicles remained unchanged, according to the Institute of Automotive Research.
From the entire list, only information about fuel prices can be highlighted. Since the beginning of this year, they have gone into a gradual decline, for example, for A-95 gasoline. At the beginning of the year, the price dropped from 52 hryvnia per liter to 44 hryvnia in the summer, but then began to rise again, reaching approximately 55 hryvnia per liter, after which it dropped again to 52 hryvnia per liter. Similar changes were also noticed in the prices of other types of liquid automobile fuels. Autogas, on the contrary, showed a sharp change in prices after reaching its lowest level in the summer - 21 hryvnia per liter. In winter, prices suddenly rose to 37 hryvnia per liter, but then dropped slightly to 32-33 hryvnia per liter. Fuel market experts predict a further decline in the cost of autogas to less than 30 hryvnia per liter.
Since the Ukrainian power grid is not bombed and there are no power outages, this helps to increase the volume of transactions in the electric vehicle market. Auto market forecasts in 2024 can be more accurate by minimizing "if" conditions. However, due to the unpredictability of events, accurate prediction remains a challenge. We hope for Victory and the onset of favorable events for Ukraine as soon as possible, which could have a positive impact on the car market. And in this case, we will develop separate detailed forecasts for each segment, taking into account all available data at that time. In this publication we will present our vision of the car market next year, provided that it remains in its current state, with a minimum number of “if” conditions.
In the passenger car market during 2023, there was an average monthly volume of 80 thousand resales per month, with a gradual decrease in volumes by the winter period. Next year, we can predict similar quantitative results for car purchase and sale transactions within the country. The growth engine for this segment could be an increase in car imports. As a rule, every additional 10% of import volume contributes to an increase in secondary market volumes by +2%. Therefore, the monthly volume of transactions on the secondary market can be expected to be around 100 thousand.
In 2023, there was a gradual but stable increase in car imports. The shortage of cars in the domestic market leads to an increase in pent-up demand for “freshly imported” passenger cars. During the current year, the Ukrainian vehicle fleet was replenished monthly by an average of 18 thousand used passenger cars, with a gradual increase in this volume to 23.5 thousand per month by the end of the year. Based on this information, it can be assumed that the trend towards an increase in the number of new arrivals of used passenger cars will continue next year. Mainly, these cars come from Europe, since the number of passenger cars coming from America is noticeably smaller (20-25%). It is interesting to note that cars from the US that are imported cost on average twice as much as before the conflict, valued at around $20,000. Subject to improved tax conditions, the total potential of this sector is up to 50 thousand cars per month. In the absence of such changes, this figure will be limited to 35 thousand cars per month.
In the new passenger car segment, independent dealers are becoming increasingly active, offering an interesting direction in the form of “almost new cars”. These cars are actually new, but are considered used due to their registration in the country of origin, most often China. During the current year, an average of about 5 thousand new passenger cars were registered monthly. During the year, the number of monthly registrations of new passenger cars fluctuated significantly, varying from 3.2 thousand to 6 thousand. It is important to note that when there is a shortage of cars from official dealers, independent dealers are successfully meeting the demand by offering alternative options, including imports for other markets. It is possible that unless authorized dealers change their strategy, we will continue to see an increase in the share of cars coming from China and an increase in independent dealer activity. However, given that most of these purchases are made at full price without additional financing, it can be assumed that transaction volumes will remain at the level observed this year, perhaps with a slight increase. Factors contributing to sales growth in this segment may include financing and improving economic conditions, but it is important to note that all influencing factors have their limitations. Taking this into account, the market potential for new passenger cars sold by official dealers next year can be predicted to be up to 8 thousand per month. Independent multi-brand importers will likely sell about the same amount, perhaps 5-15% more.
In 2023, the electric vehicle segment, including both new and used models, continued to demonstrate stable and significant growth. However, towards the end of the year, the difference between sales volumes in subsequent and previous months was noticeably reduced. It is important to note that due to the uneven distribution of charging stations, different standards and operators of electric charging stations, electric vehicle owners most often prefer to have their own charging point at home. Increasing supply of electric vehicles and falling prices are benefiting the growth of this segment, but the lack of buyers who own their own charging point is considered a limiting factor for increasing sales in this area. We'll likely continue to see growth in sales of both new and used electric vehicles over the next year, but will gradually approach a point of saturation, moving from constant growth to fluctuations around monthly averages. The growth of the electric vehicle sector will be supported by an increase in the selection of electric cars from abroad, falling prices and owners' interest in saving on more expensive fuel. The estimated potential of this segment for 2024 is about 8-9 thousand passenger electric vehicles per month. An increase in sales of electric trucks is not expected due to limited supply on the market and the lack of customs clearance benefits, which reduces interest in this category of vehicles.
2023 saw strong growth in demand for light commercial vehicles (LCVs). It is likely that businesses will continue to show interest in this category of vehicles next year, given their availability and flexibility. Total sales volumes in this segment are estimated at more than 5 thousand cars per month. Most entrepreneurs will import used light commercial vehicles from abroad, mainly under 5 years of age, provided that there are no changes in customs clearance (excise) conditions. The demand for such cars exists and will grow, but it will not always correspond to the financial capabilities of entrepreneurs.
The truck fleet in Ukraine weighing more than 3500 kg is represented by a variety of vehicles. Here you can find both modern trucks from well-known global manufacturers, as well as outdated models dating back to the Soviet period. Especially the second category, which is most often in an unreliable state, is subject to gradual replacement. This process should become the engine for the development of this segment. However, the growth of this segment is hampered by limited purchasing power and high excise taxes on the import of trucks older than 5 years. To summarize, for the secondary market in 2024, the scenario of 2023 is most likely to repeat: first, a decrease in trading volumes, and then, with the beginning of seasonal agricultural work and an increase in construction activity, perhaps some recovery in this segment. Sales of new trucks in this category will be limited, mainly due to the complete cessation of supplies of Russian trucks to the market. Enterprises are now replacing their fleets with vehicles from Europe, China, Korea, India and other countries. This leads to higher prices for final products with Ukrainian identification. Approximately 40% of new trucks in this segment will be based on chassis from China, India or similar manufacturers.
During 2023, there was a gradual reduction in the volume of purchases of truck tractors by Ukrainian carriers. This is probably due to the saturation of their parks with the necessary equipment. The previous sharp increase was seen a year earlier, when cargo sales slowed due to restrictions in air and sea transport, as well as problems with cargo transportation by rail. The blocking of the Ukrainian-Polish border carried out by the so-called “activists” will additionally affect the demand for long-haul tractors. This "action" has caused unpredictable and unreasonable losses for many carriers, and its effects will continue to affect the tractor market. Consequently, in 2024, a slight decline in purchase volumes of truck tractors is expected to continue. The market will mainly feature used tractors from abroad. Demand for these vehicles peaked in 2022 and is now expected to reach 1.5 to 2.5 thousand tractor units per month.
Also in 2023, there was an increase in the total volume of purchased buses of all types, with this growth recorded in early autumn. Further developments in this segment will depend on the announcement of tenders for domestic or inter-regional transport by the relevant authorities, especially in the context of locally produced buses. As for large-capacity buses for long-distance transport, the theoretical demand for them will continue to exist until civil aviation resumes operations. However, carriers are cautious about purchasing tourist class buses due to their high cost. In the event of a decrease in passenger traffic on regular international routes where they are currently used, tourist buses of this class may turn out to be unprofitable for irregular tourist orders due to their high cost. To summarize, next year we can expect that the total volume of transactions in this segment will remain approximately at the current level, ranging from 500 to 1000 buses per month. This is where the secondary market will play a key role, with little addition to the fleet of new imported used or locally manufactured buses.
The motorcycle segment is a special part of the market, with a significant share of informal transactions. However, official data indicates an annual increase in the number of motorcycles sold. These are mainly small Chinese-made models that are used in rural areas and small towns where there is no public transport or its availability is limited. Presumably, in 2024 we can expect that the total sales of motorcycles will exceed 60 thousand units of various types.