Victor SHUMILO: The sale of hybrid cars exceeded the sales of cars with traditional fuels in 2019.
Interview of InfoMarket Agency
The new car market grew by 5.8% within 9 months in 2019th (total of 4,768 units were sold) compared to the same period of last year, while 4524 units were sold over 9 months in 2018. Victor Shumilo is the CEO of "Continent" company which is the official Toyota brand dealer in Moldova, he notes that the leaders in brand sales are Dacia, Skoda, Hyindai and Toyota, same brands as previous years.
InfoMarket: What is the situation at the new cars’ market this year in comparison with previous years? Have new trends appeared?
Victor SHUMILO: The structure of the automotive market is changing. We can see this especially within last 9 months by the total number of Toyota cars sold (462 units), more than a half were hybrids (55%). We sold 252 units which is 13% more than in 9 months of last year. The market has also experienced an increase in sales of electric vehicles.
InfoMarket: But, Toyota has not yet introduced an electric car in Moldova.
Victor SHUMILO: Toyota plants issue their own electric cars for a long time but this manufacturer believes that it is not the right time to supply them because of the lack of infrastructure in Moldova. Of course, there are some dealers near the shopping centers in the country but there are very few of them, so the lack of infrastructure does not allow us to operate electric cars with confidence, especially, long-distance trips. Those type of vehicles considered to be city transport nowadays. Toyota created an electric car based on the RAV-4 model 10 years ago, the manufacturer even released one and a half thousand cars but the technology was still quite expensive and not yet effective at that time.
InfoMarket: When do you think we can expect a widespread concern of electric vehicles in Moldova?
Victor SHUMILO: According to our calculations - not earlier than 2025-2030. There will be mass use of electric vehicles on condition that the infrastructure will be provided. Meantime, this year can be described as the year of the influx of hybrid cars, both new and used, especially in taxi services. So, we can say that their time has come, and it is not a surprise for us.
Toyota has created the first hybrid car 20 years ago, then sold hybrid cars at a loss within the first 5 years to make the market try them. But, hybrid cars are not the same. A hybrid car implies the presence of an internal combustion engine and an electric engine. The technologies Toyota plants use are mostly different from all other automakers, they are self-recharging; the driver does not need to look for an outlet to recharge the battery. But, there are hybrids with additional batteries installed which increase the power of the car at start. However, it does not give the effect that gives a Toyota hybrid car combining the power of an electric motor and an internal combustion engine.
InfoMarket: 20 years have passed before the era of hybrid cars began in Moldova. It might take another 10 years for the era of electric vehicles. Are there other new technologies in the cars industry?
Victor SHUMILO: Yes, cars powered by hydrogen. Toyota mass-produced the Mirai hydrogen brand, it will be used at the Tokyo 2020 Olympics. The second generation of Mirai represented this year. In addition, hydrogen-powered cars will also serve the Olympics as well as hydrogen-fueled buses with zero CO2 emissions.
InfoMarket: Is this technology cheaper for the consumer?
Victor SHUMILO: Perhaps not yet, there are some security issues, since high-pressure technologies are used. This is also a 100% environmentally friendly car, but this technology also needs infrastructure and special gas stations.
The cheapness and effectiveness of any technology, first of all, is determined by the mass character, as well as by how widespread it is, and how many manufacturers use it. This is the case with the battery for hybrid cars. Initially, it was very expensive, and this, of course, hindered the development of the hybrid and electric segments. Now, the batteries have fallen in price, they have changed, it is very important that new technologies have appeared that allow to recharge such machines by 80% faster up to half an hour, so this is not a big time loss as it was before. And, of course, new rechargeable batteries have appeared that allow you to travel up to 1000 km on a single charge. Such models are used in China actively due to the environmental problem. Toyota plans to release an electric version of the CH-R next year for this market specifically. All car manufacturers who are striving for this market are actively mastering the electric direction.
InfoMarket: Let's get back to our market. How can you characterize the buyer of a new car this year?
Victor SHUMILO: We must always consider the purchasing power of the population and our auto center offers not quite budget models. The average price is $25 thousand. Perhaps, the most important thing that has changed this year is the more stringent requirements for funds sources regulated by the law. It’ll hold back many people from purchasing new cars.
There are a lot of people who have money and they are ready to buy a new car. These are people who have worked for a long time and saved money during the period when it was not necessary to collect papers and prove the origin of funds. There are also those who worked abroad, but because of caution or lack of knowledge they did not declare the funds returning into the country from abroad or received the funds via abroad money transfers from relatives.
In general, the funds declarations are required in many countries of the world but most often a declaration is enough for the bank under the buyer's sole responsibility. Our country requires documents confirming income and the origin of funds, such as a contract of sale of a previous car or real estate. Our salon cars cost from 500 thousand lei, each purchase must have a proof of the legal origin of the funds in this case.
Some, of course, are reinsured, take loans from banks or buy cars on lease, but this increases the cost of the purchased car for them. However, such contracts are about 40% of our sales.
The sale of premium cars at the market sank significantly this year due to the tightening of the approach to checking the origin of funds, although, it had always shown stable growth earlier. Declarations restrain purchases, although, some enterprises that register profits acquire both the mass segment and premium brands.
We can observe the decline in the sales of our premium Lexus cars unfortunately. Nevertheless, we plan to expand this area and we hope to open a salon next year, we are waiting for a final decision from Japan.
InfoMarket: How have customer preferences changed? In previous years, customers usually preferred either the simplest car configurations or acquired the most complete set of functions.
Victor SHUMILO: Nothing has changed in this regard. If a person has matured, he wants to take the most equipped car, even if this affects the price.
InfoMarket: Do you have a forecast for next year's trends?
Victor SHUMILO: We must pay tribute to the previous parliament which passed a law a year ago, so the electric cars are completely exempted from excise taxes and VAT according to the law, and the excise tax on hybrid cars is reduced by 50%. That is why the number of hybrid cars and electric cars has increased many times in Moldova this year. We have this information due to the customs reports issued by our auto center which has the right to confirm that the car is equipped with a hybrid installation. Our auto center has issued hundreds of such confirmations since the beginning of the year.
If we talk about global trends and Moldova, young people are increasingly abandoning cars as property, because cars require constant care and investments. If you need a car in the city you can use taxi services or rent-a-car services actively developing including long-term periods. People move away from solving maintenance problems related to ownership; it doesn’t take to keep in mind many things like maintenance, tire change, insurance, parking, etc. Rent company will call you and remind what needs to be done or it will arrange and carry out everything for you when it’s required.
Operational leasing is also developing actively, where the risks of ownership remain with the leasing company when a property transferred to the lease in its balance sheet. We were approached by Romanian company with a request to organize the leasing but our leasing companies were not able to make proposals, except for one, but it was not attractive to the company. Our market turned out to be unprepared for this, although, our car rental companies are very interested in this due to the seasonality of their business. The demand for cars grows during the spring-summer-autumn seasons and it is very low during winter. Even car dealers are engaged in operational leasing in many countries, while we are still observing this.
The new tendency can be characterized in one phrase "do not buy a car but rent it" and the main consumers in the nearest future are youth that stand for this. Eventually, many consumers are using taxi, car-sharing or renting services which is cheaper and help to avoid maintenance problems. //29.10.2019 - InfoMarket.