The potential of automotive industry

The potential of automotive industry

in Poltava region

Poltava, 2013

Outline

• Ukrainian car market

– Concentration of the cars for thousand of people

– Cars-bestsellers

– Consumer preferences Ukrainian market

– SWOT analysis of production cars in Ukraine

– Volumes of auto in Ukraine

– Major car manufacturers in Ukraine

• Poltava region

– Geographical location of Poltava region

– Investment map of Poltava region

– Automotive industry in Poltava region

• The city of Kremenchuk

– Brief information about the city of Kremenchuk

– Kremenchuk is a place of car production

– Land plots for automobile plant and related enterprises

– Advantages of investing in the automotive industry

Ukrainian car market

Ukrainian car market

Concentration of the cars for thousands of people is much lower than in

European countries, or even than in Russia

Source: 2012, PJSC «Deloitte & Touche USC»

178

228

295

301

441

453

0 100 200 300 400 500

Ukraine

Russia

Slovakia

Hungary

CzechRepublic

Poland

Quantity of cars per thousand of people, 2011:

Ukrainian car market

Source: 2012, PJSC «Deloitte & Touche USC»

29 025

22 774

20 380

13 731

11 944 11 544

11 075 10 928

10 825 9 935

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

Cars - bestsellers in 2011(units):

13,1

10,3

9,2

6,2

5,4 5,2 5,0 4,9 4,9 4,5

Cars - bestsellers in 2011(%):

Quantity The market share

14,0%

12,0%

10,0%

8,0%

6,0%

4,0%

2,0%

0,0%

Preferences of Ukrainian

consumer market

• Consumers prefer economical and

compact car, B and C class;

• Strong demand for all-wheel drive

models and business class auto;

• High demand for cheap cars up to

12 thousand dollars - strong

domestic producers;

• Stable demand for expensive cars

from 25 thousand dollars

34

6

15

19

26

Structure of demand by the country of production,%:

up to 12 thousanddollars

12 -15 thousanddollars

15 -20 thousanddollars

20 -25 thousanddollars

from 25 thousanddollars

Ukrainian car market

Source: 2012, PJSC «Deloitte & Touche USC»

Strengths Weaknesses

• Skilled and relatively cheap labor force

• Capacious consumer market

• Geographical and cultural proximity to

the European consumers

• Modernization of the infrastructure

related to the holding of Euro 2012

• Developed production capacities

• Pressure on the business of the

various authorities

• Over-regulation and poor predictability

of the economic environment

• The dependence of the economy on

external factors (input prices, demand

in the EU)

• Tax pressure and the complexity of the

tax system

Opportunities Threats

• Trade liberalization with the EU (export

growth in this direction)

• Base of export to Russia

• Rising consumer incomes (more than

70% of households still do not have a

car)

• Full recovery of auto crediting

• State support for automotive industry

(soft loans, tariff protection)

• Restrictions on exports to Russia

(recycling fee, customs regulation)

• Sending of cars from the EU at lower

import duty (including used cars)

• Macroeconomic risks (slowdown in

GDP growth, investment outflows,

reducing of foreign financing)

SWOT analysis of production cars in Ukraine

Source: 2012, PJSC «Deloitte & Touche USC»

Ukrainian car market

27,82

24,28 17,33

12,79

10,47

5,61 1,70

Structure of demand in the country of production,%:

EU

South Korea

Japan

Russia

Ukraine

China

Other

59 360

20 240

11 656 6 329

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

ZAZ Bogdan Eurocar KrASZ

Volumes of auto in Ukraine,pc.:

Source: 2012, PJSC «Deloitte & Touche USC»

Major car manufacturers in Ukraine

Source: 2012, PJSC «Deloitte & Touche USC»

Poltava region

Geographical location of Poltava region

Source: Poltava Regional Center of Investments and Development

Investment map of Poltava region

Map symbols

Source: Poltava Regional Center of Investments and Development

Automotive industry in Poltava region

• Poltava region has a long history of truck production

(since 1958)

• Two universities and six colleges that train personnel

for the automotive industry. Up to 1000 specialists

graduate every year

• Automotive industry employs near 7 000 people

• In the manufacturing process employs about 100 related enterprises (the

largest - HC "AvtoKrAZ" – 4 500 workers, LLC "KrASZ" - 358 employees and

PJSC "Vepr" - 42 employees, PJSC "Kremenchug Wheel Plant", JSC "Obod",

LLC "Autosteklo", SPE LLC "Prisadki", LLC "Yuniol", LLC "Krempolimer" and

others)

• The level of salary paid to blue-collar workers is about from 240 to 300 EURO

Source: Poltava Regional Center of Investments and Development

The city of Kremenchuk

Kremenchuk is a place of car production

Source: Poltava Regional Center of Investments and Development

Brief information about the city of Kremenchuk

• Advanced river transport. River port is available. Requirements for the

ships: draught 3.2 m, length 125 m, type of vessel: river-sea, tonnage: to

3.5 thousand tons

• Distance to Kyiv - 286 km, to Boryspil - 254 km, to Poltava – 119 km, to

Kharkov - 250 km, to Dnepropetrovsk - 162 miles, to Donetsk – 403 km,

to Zaporizhzhya – 225 km, to St. Petersburg – 1 585 km

Source: Poltava Regional Center of Investments and Development

• Kremenchuk is an industrial city

• The city area: 10 000 ha

• The population of the city - about

230 thousand people

• Located at the crossing of highways (Boryspil - Kyiv and Poltava

Olexandria-Odessa) and railways

Land plot for automobile plant and related enterprises

Land plot

• Land plot is located in Kremenchuk. Territory area adjacent to the Northern industrial hub. The plot is proposed for placement of industrial facilities

• Land area :168.55 ha

• Owner : City Council

Source: Poltava Regional Center of Investments and Development

Advantages of investing in the automotive industry

• The strategic location of Ukraine: access to markets of the European Union,

Asia and the Middle East;

• Low transaction costs for business;

• "0" rate of taxes on equipment and components to it that are not produced in

Ukraine and imported by initiators of creation and/or managing companies for

the construction of an industrial park;

• "0" rate of taxes on machinery, equipment and components that are not

produced in Ukraine and not excise taxed goods imported by participants of

industrial parks for business within industrial parks;

• Exemption from equity participation in infrastructure development of

settlements in which established industrial park;

• State support (supply of engineering and transport infrastructure) industrial

park;

• Transparent and simple acquisition of ownership rights of land within the

industrial park;

• Time to market for participants of the industrial park is 6 - 9 months;

• Highly skilled workforce;

• Large domestic market - 46 million people

Source: Poltava Regional Center for Investments and Development

Contacts

4, Shkolnyi Lane, of. 41, 45. Poltava, Ukraine. 36003

Leta Dmytro - Acting Director of Poltava Regional

Center of Investments and Development

tel.: +38-0532-50-08-64

mob. tel.: +38-066-816-52-09

e-mail: leta.dima@gmail.com

skype: leta.dima

www.investinpoltava.com.ua

Source: Poltava Regional Center for Investment s and Development