Alexander Timofeev, the CEO of the company «AWT Bavaria Ukraine» — the official importer of BMW cars in Ukraine — told LDaily about the place of the domestic car market in the Global BMW system, the prospects of investment in local production, the ecological component of the business and the social projects of the company.
LDaily: Alexander, be so kind to tell us about BMW Ukraine.
A. Timofeev: “BMW Ukraine” has been operating since 1997, and I have been working for this company since 2000. I began to work as a Commercial Director and then became its CEO.
“BMW Ukraine” is now a group of companies that deal separately with retail and wholesale. We started with 45 cars per year and reached almost three thousand cars sold in 2017. In general, many projects were implemented: the company invested a lot of money in Ukraine, in particular, in our new complex, in which we are currently located (on the Boryspil highway), and in our dealerships. Today, our task is to bring them to the European level, so that they have a modern look and meet the standards of the corporation.
LDaily: What part does BMW Ukraine take compared to all your departments in the world?
A. Timofeev: A drop in the bucket. Of course, this is a very small part, because BMW is producing 1 million 300 cars a year, and 3000 is a drop.
LDaily: What is BMW’s worldwide structure?
A. Timofeev: BMW plants are located mainly in Europe – in Germany, Great Britain and Austria. There are plants operating in South Africa, the United States of America, and China, as well as several other countries. I have listed only those countries with really large productions.
The plant on its own is a rather large structure, with a budget comparable to the budgets of some countries. The company only spends billions on new developments – more than 15-16 billion euros. Our concern has several brands – BMW, MINI, Rolls-Royce, BMW Motorrad.
In addition, we still have electromobiles – this is a rather large unit, completely a new one to BMW. We already sell these cars in Ukraine. We try not to “bring up the rear”, so almost all the products that appear are introduced immediately to the local market.
LDaily: How many electromobiles` producers are represented in Ukraine?
A. Timofeev: Officially, there are BMW, Renault, Hyundai and, I believe, Jaguar will be soon. Unfortunately, there are no others yet.
LDaily: Does BMW deliver only one model of electromobile to Ukraine?
A. Timofeev: We have the only electromobile called “BMW i3 Electro”. And we already sell these cars in the country. We are going to sell three hundreds electromobiles this year.
LDaily: What difficulties did you face while introducing electromobiles to the Ukrainian market ?
A. Timofeev: The most difficult thing was to convince people that this is good. We conducted a lot of PR campaigns and test drives – an incredible amount in different cities. We were one of the participants who asked the parliament to lobby the law about the abolition of excise and VAT on these cars. We managed to do it this year. In fact, it helped us very much. Thanks to this decision we are trading quite actively.
LDaily: What should people be ready for when they are planning to buy an electric car? We do not have a lot of refuelings, and there are other problems…
A. Timofeev: Refuelings are not needed to a large extent,.
LDaily: Drivers can refuel at home, can`t they?
A. Timofeev: Yes, they do. The fact is that 80% of Europeans do not drive more than 180 kilometers per day, while any electric BMW goes much further and longer. Therefore, it can be simply charged from a wall outlet of a house. Here’s a gadget: you come home and turn it on. It is a city car. Of course, this makes easy to use it so you do not recharge the car during the day. You can handle all the things, return home in the evening and charge your electromobile.
LDaily: Are our car-care centers ready for electromobiles? Can they repair them?
A. Timofeev: Firstly, we have trained all the staff, so there are specialists at all our service stations. Secondly, these cars do not require a car service very often. They do not contain lubricants, therefore, there is no need to replace them. Additionally, an electric vehicle has a so-called ‘recovery mode’.
Due to the listed things, we almost do not come across electric cars in the services. We see them only in cases of accidents – then they come to us. Thus, we do not know what is ‘an electric car in repair’.
LDaily: And batteries? It is difficult to replace them, to choose the right one. And there are some problems with the documents.
A. Timofeev: We do not have such problems especially with the documents. We are importing cars from the American market. They were defective, very often after traffic accidents. If a battery was defective in some machines, we repaired it. Unlike other cars, the battery is sectional in BMW. It can be removed, disassembled, repaired, and returned to the owner’s car in a good condition.
LDaily: What is the difference between the Ukrainian automotive market and similar markets in other countries? Are there specific legislative features?
A. Timofeev: We have a rather serious “gray” car market and still a fierce smuggling. In addition, there is the “black” market of the not cleared vehicles. However, this is not the case in many countries. It’s quite difficult for our official importers and dealers to hold on to this market, because competition is precisely on the part of citizens who do not pay taxes.
We pay all the taxes because each car has its body number. None of the dealers can do anything with that. We are clearing our cars, because otherwise it will not arrive, and we value our reputation. That is why we are in an unequal situation with the rest of the market. Unfortunately, this “other part” has seriously grown recently.
LDaily: Popular “Uncleared” cars are Mercedes and BMW. How do they affect sales? How much pressure do they put on you?
A. Timofeev: They don’tpressure us too much. We are shaking another. We are bewildered by the fact that imported cars from the United States are taken, they deliver all sorts of rubbish, an incredible amount of rubbish.
Again, if you ask what different car markets are, then in the West there is a sport – to leave with a new car and not to pay a cent. There are credit products and programs that allow this kind of things. We just do not have them. We have a different offer for buyers, but from the factory together with the bank and us. It is about lending for purchase of ordinary, hybrid and electric cars BMW on an advance payment of 30% of the value, interest rate from 0.01% per annum for a term up to 7 years.
However, it happens very rarely and today there is practically no car financing. Buying under 25% per annum is just madness, absolutely unprofitable for your own pocket.
LDaily: How does Ukrainian demand differ from the world? We like more voluminous engines, but 6-7-liter cars are not used so often in the world.
A. Timofeev: It seems so – we also do not buy 6–7-liter cars. It’s just that big cars have small engines now. This is the fact that large cars are bought, and this is understandable. Buying LCV (Light Commercial Vehicle – Ed.) is also understandable, because the quality of our roads leaves much to be desired. In addition, our people are very pragmatic. LCV is convenient in terms of the fact that you can put many things there.
We still know that people do not follow the rules of the road, so those who buy a car usually understand that it is much easier to survive in a car with a longer hood.
LDaily: How do you rate the investment climate in Ukraine?
A. Timofeev: Not very positively.
LDaily: What is the reason for that?
A. Timofeev: The investment climate has never been good. You see, I can be surprised at all times as there may be some kind of verification without any warning. Although there is a moratorium on them, they still create new ways of how to come, check, and so on. Such visits are just ridiculous.
LDaily: We often talk about this. Especially “white business” complains that even when your activity is completely transparent, you are still not protected from sudden inspections.
A. Timofeev: Yes, this is absolutely correct. One calms down that when you’re doing “white business”, you can sleep well. Although, this is not necessarily right. They have constantly the desire to pinch and “earn” because we have a large and beautiful complex. The investment climate can not be normal here unless there is a fair remedy. Anyone who has invested money in Ukraine should have the opportunity to repatriate money if it is necessary and shouldn’t have any headache.
LDaily: Does BMW plan to open a plant or some other dealerships in Ukraine?
A. Timofeev: Plant… I do not think so. Sure, we will open dealer centers. We are opening a dealer center in Ivano-Frankivsk next year. We are not going to increase the number of dealerships in this direction so far. This is for one simple reason: the market is not so much developed to open dealerships in the regions. This is just unprofitable.
LDaily: Why is there no interest in deploying production? It is supposedly cheaper to rent land for a plant in Ukraine than in Europe.
A. Timofeev: It may be more profitable to rent, and maybe labor is cheaper, but you know there is a concept of risk. If something happens, it will be difficult to solve that problem. Do not forget that there is the war in our country. It also plays a big role. The investments are going to the factories located on our western border, and in that case it is easier to deduce them from there.
There is not much investment in equipment because they built factories where a large amount of manual labor is needed. And until the last year we had cheap labor. It was necessary to pay 7-10 thousand hryvnias on average. Today, with the borders opening, people actually left everything and went to work to the West. It is natural. It is not a tragedy, of course, but it’s necessary to think about this. It can happen that there will be nobody to work tomorrow.
LDaily: What are the company’s relations with the authorities? Do they help?
A. Timofeev: We do not have any conflicts with the authorities. Sometimes there are unexpected checks. Not unexpected – more expected. Sometimes, I am surprised with what they check and how they check.
We do not cooperate with the authorities at all. We do not sell cars to state bodies because we do not participate in any tenders. We sold a couple of cars to one of the ministries and we were checked for several times due to these vehicles. I have decided for myself that it is better to sell cars to private business or private individuals. They say, every man is a pilot in a calm sea. Although we did not do anything wrong in general.
LDaily: What recent changes have occurred in BMW Ukraine?
A. Timofeev: We divided the company into whole sale and retail, in order to structure the work in such a way that everyone was busy with business. We had one company that was engaged in whole sale : mainly imported cars and spare parts; and the company, the staff of which was directly engaged in customer service, the sale of goods in retail. We have separated retail in our market to activate the respective responsibilities and functions. And we expect that in the near future it will give an impulse to work more efficiently.
LDaily: Are there any social projects supported by BMW?
A. Timofeev: We have recently participated in a charity project with children paintings. We took a group of children to Germany to learn how to draw there.
Additionally, there was a competition at the end of which we sent children to a Bavarian camp. They were learning for some time there. They got new artistic knowledge. We participate in this kind of projects from time to time.
We see our social responsibility in promoting electric cars, as well as conducting various “green” projects.We actively test everything that we produce at enterprises to make it environmentally safe. We sort out all waste, all technological debris and consign it separately. This is very strictly controlled by the plant, and in addition, this is checked by all our investors, we are not polluters of our country.
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