The potential of automotive industry

1. The potential of automotive industry
in Poltava region
Poltava, 2013

2. 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

3. Ukrainian car market

4. Ukrainian car market
Concentration of the cars for thousands of people is much lower than in
European countries, or even than in Russia
Quantity of cars per thousand of people, 2011:
Poland 453
Czech
441
Republic
Hungary 301
Slovakia 295
Russia 228
Ukraine 178
0 100 200 300 400 500
Source: 2012, PJSC «Deloitte & Touche USC»

5. Ukrainian car market
Cars - bestsellers in 2011(units): Cars - bestsellers in 2011(%):
35 000 14,0%
29 025
30 000 12,0% 13,1
22 774
25 000 10,0% 10,3
20 380 9,2
20 000 8,0%
13 731 6,2
15 000 11 944 6,0%
11 544 10 928 5,4 5,2 5,0
11 075
10 825 4,9 4,9
9 935 4,5
10 000 4,0%
5 000 2,0%
0 0,0%
Quantity The market share
Source: 2012, PJSC «Deloitte & Touche USC»

6. Ukrainian car market
Preferences of Ukrainian Structure of demand by the
consumer market country of production,%:
up to 12 thousand
• Consumers prefer economical and dollars
compact car, B and C class;
26 12 -15 thousand
• Strong demand for all-wheel drive 34 dollars
models and business class auto;
15 -20 thousand
• High demand for cheap cars up to dollars
12 thousand dollars - strong 19 6
domestic producers; 15
20 -25 thousand
dollars
• Stable demand for expensive cars
from 25 thousand dollars from 25 thousand
dollars
Source: 2012, PJSC «Deloitte & Touche USC»

7. SWOT analysis of production cars in Ukraine
Strengths Weaknesses
• Skilled and relatively cheap labor force • Pressure on the business of the
• Capacious consumer market various authorities
• Geographical and cultural proximity to • Over-regulation and poor predictability
the European consumers of the economic environment
• Modernization of the infrastructure • The dependence of the economy on
related to the holding of Euro 2012 external factors (input prices, demand
• Developed production capacities in the EU)
• Tax pressure and the complexity of the
tax system
Opportunities Threats
• Trade liberalization with the EU (export
growth in this direction) • Restrictions on exports to Russia
• Base of export to Russia (recycling fee, customs regulation)
• Rising consumer incomes (more than • Sending of cars from the EU at lower
70% of households still do not have a import duty (including used cars)
car) • Macroeconomic risks (slowdown in
• Full recovery of auto crediting GDP growth, investment outflows,
• State support for automotive industry reducing of foreign financing)
(soft loans, tariff protection)
Source: 2012, PJSC «Deloitte & Touche USC»

8. Ukrainian car market
Volumes of auto in
Ukraine,pc.: Structure of demand in the
country of production,%:
70 000
59 360 1,70
60 000 5,61
EU
50 000
South Korea
40 000 10,47
27,82 Japan
30 000
20 240 12,79 Russia
20 000 11 656
6 329 Ukraine
10 000
17,33 24,28
0 China
ZAZ Bogdan Eurocar KrASZ Other
Source: 2012, PJSC «Deloitte & Touche USC»

9. Major car manufacturers in Ukraine
Source: 2012, PJSC «Deloitte & Touche USC»

10. Poltava region

11. Geographical location of Poltava region
Source: Poltava Regional Center of Investments and Development

12. Investment map of Poltava region
Map symbols
Source: Poltava Regional Center of Investments and Development

13. 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

14. The city of Kremenchuk

15. Kremenchuk is a place of car production
Source: Poltava Regional Center of Investments and Development

16. Brief information about the city of Kremenchuk
• 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
• 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

17. Land plot for automobile plant and related enterprises
• Land plot is located in
Kremenchuk. Territory area
adjacent to the Northern
industrial hub. The plot is
Land plot proposed for placement of
industrial facilities
• Land area :168.55 ha​​
• Owner : City Council
Source: Poltava Regional Center of Investments and Development

18. 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

19. 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