The potential of automotive industry in Poltava Region

1. The potential of automotive industry
in Poltava region
Kremenchuk, 2012

2. Outline
• Ukrainian car market
– Major car manufacturers in Ukraine
– SWOT analysis of production cars in Ukraine
• 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 plot for automobile plant and related enterprises
– Advantages of investing in the automotive industry

3. Geographical location of Poltava region
Source: Poltava Regional Center for Investment and Development

4. Ukrainian car market

5. Ukrainian car market
Concentration of the cars for thousand of people is much lower than
in European countries, or even then 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»

6. Ukrainian car market
Structure of demand by
Cars - bestsellers in 2011:
the country of
production,%:
35 000
up to 12
30 000 thousands of
dollars
25 000
12 -15 thousands
20 000 26 of dollars
34
15 000
15 -20 thousands
10 000 of dollars
5 000 19 6 20 -25 thousands
0 of dollars
15
Renault
Nissan
ZAZ
Toyota
Ford
Hyundai
Volkswagen
VAZ Lada
Chevrolet
Skoda
from 25
thousands of
dollars
Source: 2012, PJSC «Deloitte & Touche USC»

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

8. Major car manufacturers in Ukraine
Source: Poltava Regional Center for Investment and Development

9. 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 of the economic environment
• European consumers • The dependence of the economy on
• Modernization of the infrastructure external factors (input prices, demand
related to the holding of Euro 2012 in the EU)
• Developed production capacities • 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»

10. Poltava region

11. Investment map of Poltava region
Map symbols
Source: Poltava Regional Center for Investment and Development

12. 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 range from 240 to 300 EURO
• In case of hiring workers from the employment centers, the institution at its own
expense retrains specialists for the needs of investors and reimburses some funds
to enterprises that will hire unemployed people
Source: Poltava Regional Center for Investment and Development

13. The city of Kremenchuk

14. Kremenchug is a place of car production
Source: Poltava Regional Center for Investment and Development

15. Brief information about the city of Kremenchuk
• Krementchuk 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 - Kiev and Poltava
Alexandria-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 Zaporozhzhya – 225 km, to St. Petersburg – 1 585 km
Source: Poltava Regional Center for Investment and Development

16. 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 : land city council
Source: Poltava Regional Center for Investment and Development

17. Advantages of investing in the automotive industry
• Exemption from import duties on machinery, equipment and components
(art.287 Customs Code of Ukraine)
• Tax incentives for the project implemented in the automotive industry
• Profits taxed at:
from 01.01.2013 to 31.12.2017 – 0 %;
from 01.01.2018 to 31.12.2017 – 8 %;
from 1.1.2023 – 16 %; (art. 20 Tax Code of Ukraine)
• Available cheap labor force (salary in the automotive industry in the region - 240-300 EUR)
• Local Municipality guarantees the right of land purchasing after the commissioning
• Automatic VAT reimbursement for business (art.200.19 Tax Code of Ukraine)
• Local Municipality guarantees the accelerated procedure of acquiring rights to lease
• Years of experience in the automotive industry
• Experience in automotive exports
•
Benefits of participation in an industrial park Kremenchug
• Greenfield for the industrial park, which is the property of the local community (up to 6 months)
• Exemption from equity participation in Kremenchug infrastructure development (art. 36 Law
"About industrial parks"
Source: Poltava Regional Center for Investment and Development

18. Contacts
4, Shkolnyi Lane, of. 41, 45. Poltava, Ukraine. 36003
Leta Dmytro - Acting Director of Poltava Regional Center of Roshchina Olga - Marketing Manager
Investment and Development Tel.: +38-0532-56-92-94
Tel.: +38-0532-50-08-64 mob. tel.: +38-099-918-60-94
mob. tel.: +38-066-816-52-09 e-mail: poltavanationalprogects@gmail.com
e-mail: leta.dima@gmail.com
skype: leta.dima
www.obladmin.poltava.ua/invest
Source: Poltava Regional Center for Investment and Development