Bosch and the EBRD join forces as Ukraine's car market accelerates

By Axel  Reiserer

Bosch - One for the road

The EBRD and Bosch are collaborating to establish a network of service centres across Ukraine in response to the country's booming car market.

The Ukrainian car market is accelerating faster than Formula 1 star Lewis Hamilton coming out of the pit lane. Almost 40 per cent more cars were sold in 2006 than in 2005, and there is no end in sight to the boom. With annual sales of 371,000 cars in 2006, Ukraine was the 9th largest car market in Europe by sales volume.

In the West, it is not commonly known that Ukraine has a huge car industry. Daewoo of Korea (owned by GM) and AvtoVaz of Russia operate huge plants which produce hundreds of thousands of cars every year, mostly for the domestic market, while GM’s Opel brand and Skoda (owned by Volkswagen of Germany) also operate assembly lines.

On the streets of Kiev today one can see all kinds of cars. Old Soviet vehicles, new and used Western cars, and more and more locally produced cars. High import taxes have helped Daewoo to become the market leader, with AvtoVaz competing strongly for the top spot. If it is true that car ownership reflects social segmentation, the country’s middle class must be growing strongly.

EBRD framework helps private entrepreneurs

But even the most reliable, brand new car – whether it comes from assembly lines in Zaporizhzhia , Nagoya or Wolfsburg – regularly needs servicing and sometimes even repairs. With the help of the EBRD, Bosch (the leading German spare parts manufacturer) has established a network of licensed service centres in Ukraine, where private and commercial customers get first-class treatment for their little sweethearts.

Under a framework agreement initially signed in 2001 and extended in 2006, the Bank is providing up to €14 million for on-lending to private entrepreneurs to become Bosch partners. The network is expanding rapidly with nearly 60 licensed service centres located across the country. “The cooperation with the EBRD has brought us much-needed stability, meaning we can operate successfully,” says Viktoria Yermak from Bosch Ukraine.

Bosch network expands across Ukraine

Viktor Mednikov is the owner of a Bosch Service Station on the outskirts of Kiev. His facilities resemble a doctor’s office more than a car workshop. Everything is neat, clean and very orderly. Huge pipes hang from the wall and remind visitors of giant vacuum cleaners. The seductive smell of oil, rubber and exhaust fumes, so characteristic of a garage, is all but gone. Were it not for the giant truck parked in workshop number two with its driver’s cabin upside down, making it reminiscent of a beached whale, nobody would think that anyone here has to dirty his hands.

The station services and repairs diesel engines. “If you have a problem, Bosch will find a solution,” says Mr Mednikov. His station uses licensed, state-ofthe-art Bosch spare parts and software. He employs some 20 mechanics who serve 20 to 30 customers a day. They receive extensive training and Bosch is also providing management training to its partners.

The German parent company also dispatches inspection teams to guarantee quality standards. This is very important: “Today, quality is all that counts,” says Mr Mednikov. That is to say that quality is the most important pitch for the franchises. “Repairs can be very expensive,” admits Mr Mednikov. Only guaranteed quality can persuade car owners not to have this work done on the cheap in the shadow economy. Competition is stiff, but it seems that Mr Mednikov is doing quite well.

Currently he is pondering plans to expand his service station. Although every car owner in the world dreams of a repair-free vehicle, it is safe to predict that there will not be a shortage of work for Mr Mednikov. Bosch and the EBRD will make sure that it is done to the highest standard.