There is lots of potential in the Ukrainian market for trucks, explains Ivanov Yevgeniy, commercial director Volvo Trucks Ukraine. However, the market is now uncertain due to Covid, a weak dollar, and shortage problems.
There is lots of activity going on at Volvo Trucks Ukraine in Kyiv. Several trucks are getting serviced in their garages, and other trucks are being prepared before sales. Several trucks, mainly for the construction sector, are lined up outside, ready to be picked up, and sales are much better now in 2021 than in 2020, which was affected massively by Covid-19, explains Ivanov Yevgeniy, commercial director Volvo Trucks Ukraine, to Ukrainenu.
“Restaurants and cafes were closed last year and affected the need for supply and, therefore, also the need for trucks,” says Yevgeniy, “Some countries closed their borders for transit, and it affected demand. 2020 was a tough year, but 2021 looks very promising. We will be close or higher than sales in 2019 if it continues as now for the rest of the year.”
“However, the situation is a little unpredictable now,” says Yevgeniy, “The higher sales now could be because companies didn’t invest last year. Also, we see an increase in inflation prices, the U.S. dollar exchange rate is dropping, steel prices are soaring, and we have a delay in semiconductors to our control units in vehicles.”
See global steel prices below, traded in Shanghai in Yuan per tonne.
For example, the lack of semiconductors means that it now takes six months for a new truck to be ready from the order comes in. It used to take only three months, explains Yevgeniy, but adds that this is a problem for the whole sector.
Ukraine is getting better
Volvo Trucks has been in Ukraine for 25 years and has around 100 people working at its headquarters in Kyiv, including technicians and mechanics. They work with seven other private dealers, who have a contract with Volvo Trucks Ukraine, allowing them to service and sell Volvo products around Ukraine.
Yevgeniy says that Volvo Trucks Ukraine had around 19 percent of the market of Western trucks being sold in Ukraine last year. The goal is to reach 20 percent this year and maintain it for the years to come. Yevgeniy points out that Volvo Trucks Ukraine had experienced significant growth since 2017, when the market share was only 13 percent.
“Around 2,500 new trucks are sold in Ukraine every year by Western companies,” says Yevgeniy, “According to statistics in Sweden, that number should be around 20,000 units in a country the size of Ukraine so the market can grow five to seven times.”
“Ukraine lost a big part of its territory in the war after the Maidan Revolution in 2014, where also the exchange rates dropped,” says Yevgeniy, “But the market has been improving step by step ever since until we were hit by Covid-19 last year.”
See below the price for one USD in UAH over the last 20 years.
He points out that Ukraine has immense potential, and that Ukraine is home to many rare minerals, which are not yet mined. Ukrainenu recently wrote about the potential for rare minerals in Ukraine, which is attracting international attention. Furthermore, the government’s major construction program is also promising for the future sale of trucks in Ukraine, Yevgeniy says and points out that 60 percent of all trucks sold by Volvo Trucks Ukraine this year is for the construction sector.
“The opening of the land market can also give something,” says Yevgeniy, “It attracts the eyes of the investors, and we expect that there will be a bigger need for trucks in the agricultural sector. Furthermore, we also see that the government is making more weight controls of trucks with overweight to safe the roads, and it can also be good for our sales.”
The Ukrainian government approved the long-waited landreform last year, which opens for the purchase and sale of agricultural land in Ukraine. The sale of land was previously prohibited, which it has been since Ukraine gained independence after the Soviet Union. The new changes are expected to bring more foreign investors to Ukraine.
The workforce is a problem
However, the growth in the Ukrainian market does not mean that Volvo Trucks Ukraine will open production in Ukraine at this point. Yevgeniy says that the market in Ukraine is still too small, but he cannot rule out that it could change in the future if the Ukrainian market would at some point reach its potential. He points out that Volvo Trucks, for now, has production in Russia, mainly because it is a much larger market.
For growth to happen in Ukraine, the country also needs to be better at educating technicians, Yevgeniy points out and says that it is hard to find enough workers.
“Problem is not quality,” he says, “But the problem is convincing young men to become technicians. They would rather be bloggers, work in IT or become lawyers. We do what we can to attract them, but we have a problem here.”
“We work with high schools, offering traineeships and summer jobs so that more might be interested in the sector, and we do whatever we can for them not to feel neglected and make sure that they receive a good salary and education,” Yevgeniy says.