In the first half of 2024, Ukraine imported 32,800 finished vehicles, 21% more than in the previous year, according to calculations by the Ukrainian automobile association Ukravtoprom.

In 2023, Ukraine imported 60,682 finished vehicles, 60% more than the previous year, when car imports into the country had almost come to a standstill due to hostilities. The value of imports reached UAH 105 billion ($2.54 billion).

In July 2024, however, over 6,400 finished vehicles were registered in the country – the highest monthly figure since Russian troops crossed the Ukrainian border.

Toyota remains the market leader in Ukraine with 1,024 finished vehicles registered in July, followed by BMW with 629 and Renault with 587 finished vehicles, Ukravtoprom reported.

In the first seven months, Ukraine imported 228,319 vehicles, the lion’s share of which were used cars. Volkswagen is the leader in this segment with 25,498 units delivered to the country. Renault ranks second with 17,479 vehicles and Audi ranks third with 13,173 vehicles.

The war has changed inbound logistics enormously. In recent years, most finished vehicles and used cars were delivered to Ukraine by sea, via the ports of Odessa and Kherson. However, a naval blockade imposed by the Russian Navy in 2022 forced importers to switch to automobile transport.

More than 60 percent of finished and used cars are delivered to Ukraine from the European Union, and around 30 percent from North America, according to calculations by the Ukrainian Institute for Automotive Market Support. (Continued below the table)

Threatening war tax
The increase in sales in July was largely due to the government’s initiative to impose a 15% war tax on new car sales.

According to estimates by Oleg Nazarenko, General Director of the All-Ukrainian Association of Automobile Importers and Dealers, within two days of the announcement of the initiative in mid-July, Ukrainians bought all the finished vehicles available at local dealers.

“Car dealerships are empty. Customers flocked to buy the finished cars and thus avoid the new tax,” Nazarenko wrote in a statement on his Facebook page.

In general, Nazarenko criticized the government’s initiative because he believed it could lead to a standstill in the sale and import of finished vehicles.

“Instead of filling the budget, the state is faced with tax cuts,” Nazarenko claimed, recalling that under existing regulations, a 5 percent tax is already levied on the sale of finished vehicles to the state pension fund. “The excessive burden of 20 percent is enormous – it will take a long time for customers to get used to it.”

The government’s plan to impose a 15 percent tax on the sale of finished vehicles could collapse the auto market, says Oleg Omelnytskyi, director of the Auto-Consulting think tank in Kyiv.

Together with the devaluation of the Ukrainian hryvnia, the military tax will have a huge impact on the purchasing power of the Ukrainian population.

“You can forget about the market recovery. The existence of dealers of certain brands is being questioned,” Omelnytskyi admitted.

Small traders with moderate sales will have to fight for survival, especially in the “difficult regions” near the front line, where the number of potential buyers is already low, Omelnytskyi warned.

Omelnytskyi speculated that customers would switch en masse to used cars that are already registered in Ukraine because they are not subject to the new tax.

However, the war tax bill still needs to be passed by the Verkhovna Rada, the Ukrainian parliament, to come into force.