Josef Graf, CEO of Porsche Ukraine (the official importer of Audi, SEAT and Volkswagen Commercial vehicles), shared his thoughts with LDaily on the pandemic situation in the automotive industry and directed attention to the significant decline in sales both in Ukraine and globally. However, despite all the issues and being aware of its own social importance, the company provided substantial support to some medical institutions in Kyiv, providing them with cars and fuel. Mr. Graf is convinced that assistance and common efforts are the right track to defeat the pandemic.
LDaily: The coronavirus can significantly cut down the global automotive industry. The crisis may result in millions of unsold vehicles and financial losses for manufacturers. How much have car sales dropped?
J. Graf: I can’t speak about the situation globally, although evaluating the Ukrainian car market, it carried on relatively well in March. As a result, there was a decrease in sales by only 10-15% of the planned estimate. However, in April we are already seeing a decline of up to 70-80%, which is mainly caused by a significant decrease in demand, as well as limited conditions for car sales. It seems that for some time the industry will have to overcome obstacles and deal with a crisis.
LDaily: Will there be difficulties with delivery of cars to Ukraine?
J. Graf: Most probably, this is to be expected, especially when many auto manufacturers have temporarily stopped production to protect the health and life of their employees, suppliers, dealers and clients. The question now is the volume of supply and the desire to restore the established supply chain.
Another big question is how consumer demand will evolve in the face of the global recession, and how flexible auto manufacturers will be to the changes for adapting to these fluctuations.
Thus, there are a number of factors that are nowadays quite unpredictable and controversial leading to uncertainty in planning.
LDaily: A lot of car dealers have significantly changed their working mode due to quarantine. In particular, showrooms with new cars have closed for visitors, whereas services are running online. What services do you offer to your clients during a pandemic?
J. Graf: Fortunately, government agencies have recently allowed dealership and service centers to continue the work, of course, with all safety requirements that meet the same standards as in the food trade.
Our partners — dealership and service companies responded to the changes creatively and professionally. They focused on communication and transfer of working processes to an online mode and created the safest conditions for the functioning of enterprises.
Today, our top priority is the protection of the health and life of our clients, business partners and employees.
We were lucky enough to provide our dealers with cars and spare parts sufficiently so that at this level, all processes have functioned and continue to function smoothly in accordance with demand and legal requirements.
LDaily: What scenarios do you see for the global car market?
J. Graf: I’ve already mentioned that we, as local actors, get only limited information on global development. Nevertheless, specialized media analyze various scenarios that, from the current perspective, predict the decline of the global car market by 25-30% this year.
As pandemic development is still dynamic and hard to predict accurately, both a more favorable and more critical scenario can be implemented. The development of car markets in different countries varies depending on the time and way a particular state has responded to a pandemic outbreak.
Ukraine reacted in about the same way as the European countries that took harsh measures promptly. The medium- and long-term perspective will depend not only on COVID-19’s control but also on the economic and social consequences of the pandemic.
LDaily: When, in your opinion, will the situation in the car market be able to improve?
J. Graf: Ukraine is a market with fairly high volatility. At the same time, business and society have an exceptional opportunity to respond to changes and fluctuations in a pragmatic way. This kind of quality is really strong. It can be considered as an important indicator and, figuratively speaking, you can build a foundation on this.
On the one hand, the drop height in the current crisis is undoubtedly high. On the other hand, it is not so devastating because, frankly speaking, the market has not yet fully recovered and returned to its initial level after the past crises. The market potential is still high despite the challenges of today. The level of the Ukrainian population’s motorization remains low; the average age of cars is quite old, so the need for fleet renewal and pent-up demand is still relevant.
It is hard to predict exactly when the opportunities for discovering the potential will be unleashed. This year will certainly come down in history as a crisis for the car market (and not only). However, we hope that the next one will bring stability.
LDaily: How has your company responded to the quarantine measures and the fight against the pandemic?
J. Graf: Just after the quarantine was announced and in order to prevent the spread of the coronavirus, the employees of Porsche Ukraine LLC switched to a remote work mode. Fortunately, we were able to respond promptly to changes and ensure that the company operated smoothly since it depends on the activities of our partners and customer satisfaction.
We could not remain uninvolved in the fight against COVID-19, so we assisted medical and social workers of Kyiv by allocating 10 Volkswagen vehicles for temporary use and providing them with fuel.
Medical staff from the Kyiv City Clinical Hospital of Emergency Medical Care, as well as the Emergency and Disaster Medicine Center of Kyiv, is already using the cars. Ambulance crews provide round-the-clock emergency medical assistance in these institutions. The Center’s employees are currently working in enhanced mode, so the opportunity to be mobile is as relevant to them now as ever.
Some more vehicles were provided to the Single Coordination Center for the transportation of patients undergoing hemodialysis and for those who are at risk of coronavirus infection.
We sincerely believe that help and common efforts are the right way to defeat the pandemic.