ph.: +38 (095) 083-75-04

ph.: +38 (067) 942-31-69

e-mail: office@ire.kiev.ua

Request a call >
X

    Feedback








    Confirm that you are not a robot

    Automobile Valuation in Ukraine

    Valuation of automobils in Ukraine has to be carried out according to a special “Valuation methodology on appraising wheeled transportation vehicles” (WTV). This methodology assumes the use of information about sales prices presented in a special “Vehicles expert’s Bulletin” (or handbook for specialist in transportation vehicles). This handbook is published quarterly and sold by a private company. The book contains prices for WTV that have been sold or offered for sale on the territory of Ukraine. The authors claim that it contains data on all sales and offers for the sale of WTV throughout Ukraine. The requirement to use a paid edition – is set out in the regulatory legal act “Valuation methodology on appraising wheeled transportation vehicles”. And only in some rare cases, not related to taxes or in the absence of data in the “Bulletin”, it is aloud to value a vehicle based on the analysis of market data.

    If the valuation is carried out for taxation or for a State-owned company (for example, to write-off obsolete WTV), then you must use this “Bulletin”. Until recently, its price was about UAH 600 per quarter. And while some appraisers claim that the “Bulletin” is not bad for mass cases, for those units that are rarely sold, the market value can be far from the real one. These differences are especially visible for specialized WTV. Nevertheless, the bulletin is widely used for mass cases.

    Peculiarities of using the comparative approach to the assessment of WTV

    Valuing the WTV, the appraiser must take into account the car producer, model, equipment, physical conditions of major components, year of manufacture, mileage, conditions in which the car was operated and / or stored, taking into account the prices of the local market where the car will be used.
    Ukrainian legislation requires the use of comparable approach and the use of prices quoted in the bulletin. Preference is given to identical WTV, but in case of their absence, it is allowed to use similar ones. Information can be obtained from both the primary and secondary markets. Primary means the market of new WTV, and secondary – the market of used WTV.
    Adjustments in the assessment of WTV
    To compare the analogue to the object of valuation, adjustments are used that take into account the differences between analogs and objects of valuation from the “Bulletin”. According to the Bulletin authors, the recommended adjustments are taken from the market pricing data, which raises some doubts.
    Identical objects. This mean WTV of the same brand and year of manufacture; similar objects mean those that do not meet the definition of identical.
    Adjustments are made for all the main parameters that affect the value of the WTV.
    In the absence of prices from a dealer or manufacturer of WTV, the use of market prices in the region is allowed.
    To assess special, specialized WTV, a combination of cost and comparative approaches can be used. At the same time, the basic value of the WTV is determined, to which the cost of additional equipment and the cost of work for installation are added.

    When assessing damaged or uncompleted WTV, a combined approach is also used, as for special and specialized WTV.
    In the case the WTV is produced individually, the assessment is carried out at the cost to manufacture with subsequent adjustment use.
    Material damage to a car as a result of an accident is determined on the basis of estimates for the cost of restoration work on the vehicle.

    Applying a cost-based approach to the assessment of WTV

    The cost approach is also used to assess:
    – expenses for re-equipment of the vehicle;
    – the costs of restoring a vehicle that has been in an accident or a dismantled vehicle;
    – expenses for individually made WTV;
    – utilization of WTV, taking into account the costs of dismantling spare parts that can be used.

    Consideration of physical and functional depreciation when assessing WTV

    Physical wear and tear is the result of car operation. The consequence of physical wear and tear is a decrease in the value of WTV.
    The calculation of physical depreciation can be carried out by summing the wear of individual parts of a car, multiplied by a fraction of the cost of each part to the total. It can also be calculated through an estimate of the cost of repairing the damage.

    Functional depreciation of a car is associated with a loss of value due to the fact that new WTV, manufactured by the same manufacturer, has, as of the date of assessment, better performance characteristics compared to the appraisal subject.

    Formula used in assessing WTV

    The value of an identical WTV have to be adjusted as follows:
    С = Ssr (1 ± (GK / 100) ± (Dz / 100)) ± Сdod
    С – the value of the subject car to be assessed, in UAH;
    Ssr – the average cost of analogs from the Bulletin, UAH;
    Dz – adjustment for the physical condition of the car
    Cdod -additional equipment the subject has compared to the average;
    GK – excess or decrease in subject mileage compared to the average, %.

    The most laborious and pointless procedure in the requirements of the methodology for assessing the WTV’s is the requirement to draw up an estimate for the repair of an old, worn out, unused WTV in order to prove that such repairs are inappropriate. This procedure increases the cost of writing off WTV’s, that have not been used for a long time, as their assessment may be more expensive than the cost of recycled metal. As a result, such objects rot everywhere in the backyards of state-owned enterprises.