After a three year slump, it seems like the automotive market in Ukraine is finally starting to bounce back. According to the latest figures for the first half of 2017, the number of passenger cars sold has jumped up by as much as 36 percent for a total of 35,700. Ukratuprom, the Ukrainian automotive industry association, is confident that they will reach as many as 90,000 vehicles sold by the end of the year.
While this number pales in comparison to the 2012 sales peak of 217,000 vehicles, the rebound is very promising for the automotive industry, especially when considering the difficulties the country has faced in the recent past which put the country into an economic tailspin. Now that the dust has settled it would seem that regrowth and rebuilding of the industry are already under way. The Ukrainian government is even going so far as to remove duties for imported components as well as other concessions that will help to speed the rebound along.
As Recovery Increases So Will Demand
The automotive rebound has come back with such vigor that the logistics industry is having a hard time keeping up, not a bad problem to have to be sure.
“Transport companies were completely unprepared for this increased demand,” according to an article from Automotive Logistics. “In the last three years, the automotive carrier fleet has decreased by about three times, as many companies simply have not survived the crisis.”
As sales and manufacturing volume increases, so will the demand for logistics, specifically in transporting components from the EU into Ukrainian manufacturing facilities. Given the drop in logistics and transportation capacity, this will prove to be a fantastic opportunity for companies who want to get on the ground floor of a rapidly (re)growing market.
“In 2017-2018, most likely there will be synergies between various participants of the automotive logistics chain in the form of joint ventures and investments of carmakers in transport companies with automotive carriers; first, because carmakers are interested in [stimulating] rising distribution of their car brands in Ukraine as well as improving quality of this distribution.”
Trade Flows Both Ways
In addition to the positive future for vehicle production, there are even more opportunities for logistics. While vehicle production might have dropped off, Ukraine has long been held as a promising site for component production and a lot of big players in the automotive industry such as Daimler, BMW, and Volkswagen, have plans to build more production facilities on the western border to better expand their distribution radius.
With the addition of new construction facilities, export trade from the EU to Ukraine and vice versa will be seeing a significant boost and, as expected, will benefit from an increase in logistics services to continue to facilitate transportation.
How InstaFreight Can Help
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