Boston, MA -- (SBWIRE) -- 11/08/2013 -- In Ukraine, vehicle production declined 49.9% year-on-year (y-o-y) in the first seven months of the year, to 23,311 units. During this period, passenger car production declined 50.0% y-o-y, to 21,353 units, and commercial vehicle (CV) production dropped 56.2% y-o-y, to 875 units.

On the back of output volumes over the year, and our view that many European markets, the country's leading trade partners, are bottoming out somewhat, we are revising our 2013 production forecast to a 40.9% fall, from a 60.9% drop previously. We now forecast a 40% decline in the passenger car market, down from a 60% drop previously, and a 50% decline in commercial vehicle (CV) segment, down from a 70% decline previously.

Vehicle production in Ukraine fell 54.2% y-o-y in the first six months of the year, to 18,240 units. During this period, passenger car production declined 54.2% y-o-y, to 16,740 units, and commercial vehicle (CV) production dropped 63.7% y-o-y, to 657 units.

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In positive news, Skoda Auto, the Czech subsidiary of German automaker Volkswagen, has started manufacturing the third-generation Octavia in Ukraine and Kazakhstan. Skoda has collaborated with local partner Eurocar to produce the Octavia sedan at Solomonovo in Ukraine. Meanwhile, the Czech automaker is manufacturing the sedan in alliance with Azia Avto at Ust-Kamenogorsk in Kazakhstan. The new Octavia was scheduled for launch in Kazakhstan in July, while it has already hit the Ukrainian market.

Despite the forecast upgrades, we still expect to see substantial declines in output over the year, and maintain our generally bearish sentiment towards the segment. In 2012, vehicle production in Ukraine declined 27.1%, to 76,281 units. Over the year, passenger car production declined 28.6%, to 69,687 units, and CV production declined 6.7%, to 6,954 units.

Sales

In the first seven months of the year, passenger car sales in Ukraine declined 1.6% y-o-y, to 122,222 units. On the back of an increasingly weak macro picture and artificially strong growth in 2012, we forecast a 3% decline in passenger car sales in 2013.

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