The production of buses fell by two times

Photo: PHL

The manufacture of buses in Ukraine is the only sub-sector of automobile production that according to the results of the first half of 2014 showed a reduction. Even the output of cars that sharply fell in Q2 showed growth in the period January-June compared to the same period last year. Also, the output of transport trucks increased, while the production of buses fell by 48% compared to the first half year of 2013.

Nearly all manufacturers register decline

Senior analyst at the ART Capital Oleksiy Andreychenko says the reduction of output of buses is largely due to the overall failure of the Bohdan Motors Corporation. He noted that after being the leader in the industry, this year the company became the underdog. The majority of buses manufactured by Bohdan Motors are of the A20 middle class modification. This year the company planned to manufacture 420 units, including for export to Russia. “However, in the view of the military crisis in the east of Ukraine and trade wars with Russia these plans fell through – over the first half of the year the plant produced only seven vehicles,” the expert noted. It is totally understandable why representatives of Bohdan Motors refused to comment on the collapse, though Capital bombarded the company with letters and phone calls.

Etalon (Boryspil and Chernihiv), UkrAvto of Zaporizhzhia and the Chasovoyarsk Bus Plant accounted for the lion’s share of collapse in the domestic automotive industry. These manufacturers and Bohdan Motors produced mainly middle-class passenger buses. “The demand for such buses sharply decreased as the decline of Ukraine’s GDP is lowering economic expectations of carriers, forcing them to suspend capital investments into expansion and renewal of the fleet of buses. It must also be taken into account that due to the annexation of Crimea and the military actions in the east of Ukraine there is no demand for automobiles in these regions,” said Andreychenko, adding that earlier Bohdan Motors regularly supplied A20 buses to Luhansk. Today, it has lost this traditional market.

Deputy Chairman of the Board of UkrAvto Oleh Papashchev also blames the difficult geopolitical situation for the sharp decline in demand as well as the state regulation in Russia: “There a recycling fee was introduced from the end of 2012, which resulted in the suspension of Ukrainian-made buses to Russia.

Used vehicles squeeze out manufacturers

Director of the Marketing and Industrial Analysis Department of the UkrAvtoProm automakers association Heorhiy Ovsyannykov explained that to a large degree the demand for domestically manufactured buses is based on municipal and state purchases. “It is totally clear that in conditions of a budget deficit at all levels, the purchases of such means of transport and the fulfillment of social programs have been significantly reduced,” said Ovsyannykov.

The director of the association also noted that a nearly six-fold reduction in the volumes of export to Russia, which was essentially the only large foreign market in the passenger bus segment, had a serious impact on the output. “It should be noted that recently the import of used buses has increased. Over the past three years nearly 7,000 such buses have been imported into Ukraine. Such significant volumes created additional pressure on domestic automakers,” said Ovsyannykov. According to data of UkrAvtoProm, 9,700 passenger buses were manufactured in Ukraine in 2011-2013.

Leader is idle

Be that as it may, the statistics of UkrAvtoProm provides no figures on another major enterprise – the Lviv Bus Plant (LAZ), which earlier was probably the only manufacturer of passenger buses in Ukraine. Today, LAZ is controlled by the City Transport Group, while the main offices of neither of the two companies do not answer the phone.

The former manager of LAZ, who is aware of the situation at the company, said it has not been operating since last year. He explained that the manufacturer won several tenders for the supply of passenger buses and trolleybuses under the state program for the revival of city and state public transport and electric transport, but in the end it was discontinued. “LAZ also won a tender for the supply of buses to the Czech Republic, but the Czechs did not make a pre-payment due to the unstable situation in Ukraine. They proposed to pay for the buses upon delivery, but LAZ did not have the money for production without the pre-payment,” said ex-manager of the bus plant.

The source noted that LAZ did not receive the full amount of money for the delivery of buses for EURO 2012 in Ukraine. “Lviv, Sevastopol and Kremenchuk did not pay in full for the supply of buses. They ran up a debt of UAH 1.5-2 mn,” he noted.

As such, industry experts are reluctant to forecast output indicators for the second half of this year.