Carmakers To Look Abroad As Domestic Demand Remains Slack

A significant weakening in domestic vehicle demand in H2111 has made it difficult for the Ukraine's auto manufacturing segment to maintain the growth momentum seen during H111. Estimates from the country's auto association, Ukrautoprom, show that growth in vehicle production slowed to 37% year-on-year (y-o-y), to 86,488 units, during the first 10 months of 2011, compared with robust 55% y-o-y growth in H111. We expect Ukrainian carmakers' reliance on the domestic demand to hurt local production growth, but we do expect a tendency towards more export oriented production, as carmakers will be looking to exploit Ukraine's proximity to Russia.

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