Boston, MA -- (SBWIRE) -- 07/30/2013 -- In Ukraine, vehicle production declined 62.3% year-on-year (y-o-y) in the first four months of the year, to 10,122 units. During this period, passenger car production declined 62.3% y-o-y, to 9,325 units, and commercial vehicle (CV) production dropped 72.9% y-o-y, to 350 units. In 2013, BMI forecasts a decline of 60% in the passenger car segment, and a decline of 70% in the CV segment.

In 2012, vehicle production in Ukraine declined 27.1%, to 76,281 units. Over the year, passenger car production declined 28.6%, to 69,687 units, and CV production declined 6.7%, to 6,954 units.

According to the Ukravtoprom Analysis Group in April, vehicle production in Ukraine fell 63% y-o-y in the first quarter of 2013. The industry body reported that 6,974 vehicles were made in the country in the first three months of 2013, down by 11,855 units from a year earlier.

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Passenger car production fell 63.4%, to 6,434 units in Q113. The number of trucks made dropped 75%, to 244 units, with bus output at 296 units, down 48.3%. It reported that for March vehicle output fell 59% to 3,223 units. In full-year 2012, 76,281 vehicles were produced in Ukraine, a drop of 27.1% from 2011.

The majority of Ukraine passenger car output is destined for Western Europe, where sales volumes in many markets are expected to remain weak over the year (see 'BMI Remains Generally Bearish Despite April Uptick', May 17). CV production has historically been driven by strong export growth, but this dropped off in 2012 as manufacturing activity declined across much of Europe.

Sales To Drop Off

The Association of Ukrainian Motor Vehicle Manufacturers (UkrAutoprom), the source of our historical data on the industry, no longer publishes monthly vehicle sales data. On the back of an increasingly weak macro picture and artificially strong growth in 2012, we are forecasting an 11.4% decline in vehicle sales in 2013.

In 2012, vehicle sales in Ukraine increased 14.2% y-o-y, to 150,768 units. The market, although resurgent from 2011, was considerably below levels seen in 2008. We think much of this resurgence in vehicle sales was the result of 'pent-up demand' from several years of declining sales, and not a sign of an underlying improvement in the market. We believe that this artificial resurgence will dampen sales volumes in 2013 as consumers brought forward their purchasing decisions.

The domestic passenger car market is dominated by imported vehicles, and the country's CV market remains very small. We believe that the weakened domestic market, among other factors, makes Ukraine an unattractive investment choice.

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