Ukrainians are shifting to 20-year old beat-up cars

Photo: Konstantin Melnitsky

For the first time in many years only 13,000 used cars were sold in May, 2014, which is nearly two times less than in April of this year, Director of AUTO-Consulting Oleh Omelnytskiy told Capital. Such record low sales volumes have not been observed in Ukraine since the early 1990s, he says. “Even in the post-crisis period of 2009 a minimum of 30,000 vehicles a month were sold,” he noted.

A similar record was set in May also on the market of brand new cars. As Capital wrote earlier, only around 3,000 new cars were sold during the last month of spring, which is three times less than in April and five times less than in May 2013 (15,000 and 13,000 respectively.

Beat-up cars in trend

The prices for used cars are set in hard currency, which is why in hryvnia equivalent they surged almost by 40%. The majority of sellers offer small discounts up to 5%, tells Omelnytskiy. Rare buyers prefer the cheapest cars. Demand for cars assembled in the USSR, Russia and Ukraine priced at USD 500-1,500 and manufactured 20-25 years ago, sharply grew in May, says the expert. The share of Slavuta on the used car market grew in May 2014 compared to May 2013 from 5.15% to 5.3%, Niva – from 4.28% to 4.47%, VAZ-2101 Zhyguli – from 3.4% to 3.6%, says Omelnytskiy. Foreign cars that used to be popular in the past no longer enjoy the same demand. For instance, the share of sales of Skoda Fabia dropped from 1.57% to 1.32% and Mazda 6 – from 1.4% to 1.24%, according to AUTO-Consulting.

Only those cars whose owners want to get rid of their movable property faster than others are popular these days. Such sellers are prepared to offer a 15-25% discount from the initial price, explains Mykola Roslychenko, head of the PR Service of rst.ua. He says the announcements of urgent car sales have doubled over the past several months. They mostly are submitted by residents of the Donetsk and Luhansk oblasts and Crimea. Residents of eastern oblasts also more frequently buy inexpensive used cars than those living in other oblasts. The majority of them are temporarily giving preference to old vehicles over foreign-made vehicles. In this way, they try to save their property from plunderers.

Market will decline

The market of used cars is repeating the trends observed in the new car segment, but only with a two-month delay, says Vadym Palamarchuk, Director of Evropa-Avto (official dealer of Skoda). For instance, according to AUTO-Consulting, sales of new cars dropped in April by 64%, used cars – only by 24.5% compared to the same period last year. This increased the share of used cars over the past year from 67.4% to 75-80% of total sales.

Palamarchuk expects that already by the end of the year the share of used cars purchased in Ukraine will be around 70%. Director of Sales at Edem-Auto (official dealer of Hyundai) Kostyantyn Domashevskiy gives a different forecast. He believes the factor of pent-up demand is influencing the new car market stronger with around 70% of potential buyers deciding to postpone their purchase.

In 2014, official dealerships expect to sell 100,000-120,000 new cars, which is half the amount in the previous year.