Ukraine car import tax to affect Chinese makers: expert

Ukraine's new emergency tariffs on car imports which could have both positive and negative impacts on Chinese car manufacturers, a Ukrainian analyst told Xinhua on Friday.

The head of Kiev-based analytical group AUTO-Consulting, Oleg Omelnitsky, said sales of Chinese cars on the Ukrainian market may drop significantly in the short term as Ukraine's tax would affect passenger cars with engine capacities of 1,000 to 2,200 cubic centimeters, a range into which most Chinese imports fall.

"The move will affect the whole car series, which comes from China in import mode. First of all, it is cars made by Geely, Chery and almost all models of Great Wall," Omelnitsky said.

Most likely the car distributors would not be able to avoid a rise in price, as the tax, take effect from April 13, would be raised by a substantial margin of 6.46 percent to 12.95 percent, he said, adding the increased prices would hurt demand.

However, the analyst said it could be advantageous for Chinese manufacturers to establish factories in Ukraine.

"If any of the Chinese manufacturers decide to produce its vehicles in Ukraine, it will have a huge sales market. This is the local Ukrainian market, Russia, the Commonwealth of Independent States, the European Union and also other regions which have a free trade zone agreement with Ukraine," Omelnitsky said.

The analyst said the new duties alone were not enough to encourage producers to place their production in Ukraine, so Kiev was mulling new stimulating measures to attract investment in its car industry.

"The decision on a special fee is only the first step. Yesterday, I was at the meeting in the Economic Development and Trade Ministry, and I can say that the authorities plan to take a number of stimulating factors and measures that contribute to the construction of plants for the production and assembly of cars in Ukraine," Omelnitsky said without giving details.

Ukraine wants to develop an auto industry that produces modern cars, experts say, adding the government's plan can not be implemented without foreign technologies. Therefore, the authorities will do everything possible to attract foreign manufacturers, particularly from China, to site their production in Ukraine.