New Cars Remain Too Expensive for Ukrainians

“In the ten years to come Ukraine will not make any advances in its automobile industry. I think that all Ukraine’s budget funds will not suffice to develop a new automobile model that would be on a par with the Volkswagen, Skoda, Renault, or Peugeot,” Oleh Papashev, board chairman of AvtoZAZ-Daewoo Joint Venture, said on January 22. Nonetheless, this will not stand in the way of new businesses wishing to produce auto parts in Ukraine. In his words, within the three to four years to come as many as twenty joint ventures may be launched here, as multinational producers are bound to be lured by Ukraine’s inexpensive workforce and the professionalism of its workers.

In 2001, AvtoZAZ-Daewoo sold 15,400 automobiles including 11,100 Tavriyas, as compared to 12,900 cars sold in 2000. According to Mr. Papashev, the enterprise finished last year in the red, although its losses were less than in 2000. Among last year’s positives AvtoZAZ-Daewoo management stresses the favorable changes in the structure of the Ukrainian automobile market, which were due to the adoption of legislative acts initiated by car manufacturers. In part, Mr. Papashev stressed, this led to increased import of new automobiles, with 48,000 imported in 2001 alone. With its market share of 20% AvtoZAZ-Daewoo occupies its niche, which, Mr. Papashev believes, should be preserved. Tariel Vasadze, president of UkrAvto corporation, has attributed the fiasco of the popular car project to the lack of a “normal” automobile market in Ukraine. Still, lawmakers worked quite hard to create the best conditions for Ukraine’s sole car producer. And if our market is civilized after all, why are other investors not here?