How will this affect the bus market
We can assume that the purpose of the special duty is not to try to gain access to the Belarusian market for Ukrainian producers, but to protect their own.
There are five factories in Ukraine. These are Bogdan Corporation (plant in Lutsk), Etalon (Plant in Chernihiv), Ataman (plant in Cherkasy), ZAZ and Ruta (Chasiv Yar).
According to the UkrAvtoProm association, in 12 months of 2020, Ukrainian plants produced 698 buses of various classes (in 2019 - 913) (Figure 1).
About 70% of all buses are produced by two plants - in Chernihiv and Cherkasy. Basically, small class buses (so-called school buses) are produced in Ukraine. In recent years, Bogdan Corporation has focused on large-scale transport, both trolleybuses and buses.
Protectionism is about supporting babies, not the sick
Their main competitor is the Minsk Automobile Plant, which produces a full line of commercial and municipal vehicles - from buses to trucks.
According to UkrAvtoProm, in 2020, among the buses that entered the first registration in Ukraine, MAZ amounted to 229 units. And although the share is relatively small (only 12%), it is the most expensive segment of technology.
How did the Belarusians receive these orders?
In 2020, 785 buses were purchased in the Prozorro system. An analysis of almost three hundred contracts conducted by the Procurement Improvement Center of the Kyiv School of Economics showed that among them Belarusian equipment amounted to only 26 units of equipment (in 2019, however, there were much more - 130 units).
Where did the others come from? As you know, in October 2020, Kyivpastrans leased 200 Belarusian buses for about UAH 1.67 billion without a tender (the Law on Public Procurement allows leasing purchases past Prozor tenders).
That is, in fact, all 100% of the equipment, which became the first registration in 2020, MAZ delivered either through Prozorro or (mainly) through leasing programs, and in both cases - in the interests of state or municipal customers.
Therefore, the special duty, which is actually a barrier, for this market segment will have partially the same effect as the draft Law "On Amendments to the Law of Ukraine" On Public Procurement "(№3739) prepared for the second reading.
It introduces the concept of the degree of localization of production and in fact prohibits Ukrainian customers from public funds (including leasing) to buy imported equipment if the degree of localization does not meet a certain level.
We wrote more about this earlier. The effect is partial, because, in addition to Belarusian equipment, state and public customers buy other, primarily European, equipment.
According to KSE estimates, there are about 170 buses in 2020 (almost two hundred in 2019), which were purchased through Prozorro.
Manufacturers of municipal equipment outside the special duty
The commission has issued a special duty so that they do not affect the interests of other manufacturers, mainly a variety of municipal equipment.
The Commission's decision states that buses (vehicles for transporting 10 people and more), trucks with diesel engines and a gross weight of 5-20 tons and more than 20 tons are subject to the 35% duty.
The duty will also apply to special equipment (truck cranes, road sweepers, hydraulic lifts, irrigation vehicles and workshop vehicles). The only exception is for car chassis.
This exception is important for other manufacturers operating on this chassis. For example, "Spets-Kom-Service", which produces a variety of municipal equipment - from garbage trucks to irrigation equipment - and often wins with it in Prozorro.
Or Chernihiv's Pozhmashina, which produces fire trucks. All of them mostly choose MAZ chassis (also a popular chassis of the Russian URAL, which, obviously, would replace the Belarusians in the event of a special duty on the chassis).