The Deputy Chairman of the Supervisory Board of Eurocar, the Head of the Automotive Industry Federation of Ukraine and the initiator of the Transcarpathian Autocluster Initiative in Ukraine Oleg Petrovich Boyarin gave an interview about the results of 2019 and forecasts for the future.
Oleg Boyarin: “The car market is still alive. But not thanks, but contrary to “
How do you evaluate the results of the Ukrainian car market last year?
The situation can be described with one phrase: “Still alive.” And – not thanks, but contrary. How can we talk about conducting a civilized automobile business in a country where smuggling schemes receive legislative exemptions and the import of old cars is in better conditions compared to the market for new cars?
Reducing excise tax rates, introducing a preferential regime and extending the customs clearance period, eliminating environmental compliance requirements for used cars – such a policy of open support for used cars could not but change the structure of the primary passenger car market in Ukraine. One sold new car accounts for the sale of four to five used cars. In such circumstances, even maintaining sales volumes of new cars is already an achievement.
And such a vector in the direction of supporting the import of old cars looks illogical and even dangerous in the context of the state of the environment in the world in general and our country in particular. While the whole world is reviewing environmental policies and introducing new requirements for eco standards, developing new technologies in the direction of total electrification, Ukraine is rapidly rolling back into the past. Ukraine leads the world anti-rating on the death rate from air pollution per 100 thousand people – such statistics are cited by the World Health Organization. And this is not surprising, given the huge amount of emissions from old vehicles, because the average age of a passenger car fleet in Ukraine is 22.2 years. For comparison, this is twice as much as in the EU (11.1 years). In recent years, Ukraine has become a platform for the import of scrap metal on wheels from Europe. All these available facts provoke the introduction of urgent measures to create an ecosystem of sustainable transport and a long-term environmental strategy.
What first of all needs to be changed in the regulatory environment in order to restore the auto industry?
The key moment is fiscal factors. Today, when importing and selling new cars, a duty, excise tax, VAT, pension tax are paid. But while car manufacturers and importers, creating jobs, pay workers wages, provide revenues to the budget, there is another category of “business”, which, taking advantage of the financial difficulties of compatriots, does not pay a single hryvnia in the form of taxes, since it smuggles into the country illegally .
There is a whole set of tools to ensure economic growth and attract investment, industrial development. Tools that operate successfully around the world. These are special economic zones, industrial parks, clusters, etc. But their existence is useless without customs and tax incentives. In Ukraine, more than 40 industrial parks are registered. But how many of them really function? Units. Because it’s not enough to create on paper. These tools need to work. It is impossible to build a successful business in an unsuccessful country where success is a populist slogan, not a goal.
Oleg Boyarin: “We live in an inverted paradigm”
What are your business plans for this year?
We are actively engaged in the development of the automotive cluster initiative in Transcarpathia. I am convinced that it is the business community that has the competence to organize complex programs and understands how to achieve its goals. But, unfortunately, we live in an inverted paradigm. Business and society work and serve the government. This paradigm needs to be changed. Power must serve the interests of business and society. This is possible only in one case: if we consolidate. If we understand that no one but ourselves will correct this situation. And that no one will build our country for us.
Just in order to combine efforts to change the situation in the automotive industry, we initiated the creation of an autocluster initiative in Transcarpathia. This is an example of what consolidation can and should be. We want to demonstrate that Ukraine can develop in a different way. Already today, about 30 enterprises in the automotive industry are successfully working here, and investments attracted to the development of the automotive industry in the region make up more than half of the region’s investments.
We know that you are not limited only to the automotive industry in your business. What other projects are you focusing on right now?
To navigate the situation and always be ready to make a choice is the main task of a successful entrepreneur. We are interested in trying ourselves in different areas. So, risking and trying, we find for ourselves the main business for many years to come. In the context of the global changes that the global automotive industry is currently experiencing, we are placing great emphasis on IT development.
Currently, the whole world is facing challenges and changes. Everyone understands that the requirements for air emissions are tightened every year, the industry is actively switching to other types of road transport. Self-driving cars are actively developing. The auto industry, which was 10-15 years ago, is being modified. In the near future, 50% of the car’s structure will be IT. This is an opportunity for us as a country if the government begins to be guided not only by slogans, but also by specific actions.
In 2008, the share of the automobile industry in the GDP structure was 4%, now 0.01% is at the level of statistical error.
The format for the emergence of new technologies and solutions provides potential and opportunities if we are able to reorganize in time and occupy our niche in this regard.
In addition, we are developing a separate development project and plan to be a leader in this direction. It focuses on the tourism segment. This is the construction project of the Polonina Runa ski resort, which we started developing 15 years ago. In fact, it is planned to build “from scratch” a separate modern city into 336 hotels, pensions, cottages, hostels with a total of almost 20 thousand places. As well as 58 restaurants and fast food points with a total of 26 thousand seats. Its area is 100 thousand square meters, and the length of the roads is 150 km.
A photo: Deputy Chairman of the Supervisory Board of Eurocar Oleg Boyarin
What are your forecasts for the current year?
We expect moderate growth, but hardly a major breakthrough is to be expected. According to our cautious forecasts, the market will reach 100 thousand cars. The fact is that many automotive experts made such forecasts two years ago – for 2018. But that never happened. Uncontrolled imports of auto junk virtually destroyed the new car market.
But I do not want to look like an outspoken pessimist. There are some positive points. In the context of global trends in electrification, Ukraine is also increasing sales of electric vehicles. There is already a positive tendency to increase the number of electric cars almost twice (and sometimes three times) annually. In 2019, according to the Ministry of Internal Affairs, the growth of the electric car market was 56%. I would only like to change the structure of the market, because almost all of the imports at the moment are used cars. It is encouraging that this industry receives support at the state level – this also reduces the cost of transport due to exemption from payment of duties and VAT, and simplifies life for owners of electric cars by increasing parking spaces equipped with chargers for electric cars. But if the import of finished cars is in the focus of attention of the authorities, then the development of its own production of this type of transport in Ukraine is left behind. The Verkhovna Rada of the last convocation has already registered bills aimed at supporting the production of electric vehicles. Unfortunately, this package of laws from the very beginning fell into disfavor of parliamentarians of the previous convocation. And although it has been proposed more than a year on the agenda of BP sessions eight times, it has never received a real review, much less implementation.
The new composition of the Verkhovna Rada of Ukraine has the opportunity to take real steps to improve life in Ukraine. Therefore, we hope that a constructive dialogue between business, the public and the authorities regarding the development of an electric vehicle strategy and the speedy legislative regulation of the industry will bring fruitful results to every resident of Ukraine.
Oleg Petrovich Boyarin: biography
Born October 20, 1971.
Education: Diploma in Management of Organizations of the European University (Kiev, Ukraine).
A family: Married, has 7 children.
In 1996, he founded the company Auto Trading, which was later transformed into PJSC Atoll Holding. The company became the official dealer of VAZ, GAZ, KIA and Škoda cars in Ukraine.
In 2001, he founded CJSC Eurocar (production of Volkswagen Group cars in Ukraine).
Since 2005 – Chairman of the Supervisory Board of PJSC Eurocar. Since 2019 – Deputy Chairman of the Supervisory Board of PJSC Eurocar.
Since 2010 – Chairman of the Management Board of Atoll Holding PJSC, the managing company of the Atoll Holding Group of Companies, which includes 49 enterprises in 5 main areas of activity (automotive, Harley-Davidson, tourism and recreation, development, IT-direction).
In 2011, he became a Member of the Council of the Federation of Employers of Ukraine. Since 2016 – Deputy Head of the Federation of Employers of Ukraine.
In 2013, he headed the Federation of Automobile Employers.
Rewards: in 2005 Oleg Boyarin received the Order of Merit of the III degree for a significant personal contribution to the socio-economic, scientific and cultural development of Ukraine, a significant contribution to labor achievements and active civic activities.