KIEV, Ukraine - In early 1991, after the break-up of the Soviet Union, Ford Motor Co. invited US megadealer John Hynansky to the Wimbledon tennis tournament and asked him if he would be interested in opening a dealership in Ukraine.
Six years later, Hynansky is Ford's sole distributor in Ukraine. Hynansky distributes to six dealers there, and he will add three by the second half of 1998.
Ford's share of the imported car market is 10-15 percent, said Ronald Plomp, Ford's top executive for sales in the Confederation of Independent States and Baltic countries.
Ford's sales are expected to reach 1,000 units this year. In 1992, the company sold 12 units. Ford may outsell any Asian brand, say executives - but they are not certain.
Hynansky is German-born of Ukrainian heritage. He set up Winner Group Ukraine from the bustling and historic Ukrainian capital, Kiev. The company is owned by his US company, but the 480 employees are Ukrainian. They earn an average of $527 a month, compared with the national average of $82.
Winner controls two of the current six dealerships and will add another. Ultimately, it plans to sell cars through 25 dealerships, one in each oblast, or state, of Ukraine.
Winner runs the parts and distribution center in Kiev and trains the workforce. Besides Ford, Winner distributes Mobil oil products.
The company has never dealt with Ukrainian gangsters or pay bribes. It hired 60 armed security guards.
Two dealer networks already existed: one for Lada, the Russian make, and another called Auto Service, a government-owned service station network. Mercedes-Benz and Toyota use them, but Winner wanted to sign up new dealers, who invest from $500,000 to $3 million for a greenfield site.
Winner finances the dealers, and vehicles are partially financed through Winner by Ford Credit.
Winner's first dealership in Kiev opened in February 1993. It was a service garage with a small showroom. After four years of negotiations, the government allowed a new, $800,000 flagship store on the city's equivalent of the Champs Elysees. The Kiev city government owns 10 percent, in return for the land.
Most sales are to fleets. The lack of a solid banking system and credit makes retail sales difficult. Ford supplies customers like Coca-Cola, Procter & Gamble, McDonalds, Siemens, Digital and Motorola.
The most popular non-fleet car is an Escort CL with a 1.3-liter engine for $12,988, about $4,000 less than the next-cheapest Escort.
Ford prices its cars in dollars, even though transactions in dollars are illegal. The price is changed to hryvna ($1=1.89 hryvna) at the time of sale.
Import taxes were zero in 1992 and have risen steadily since. The average duty is 30 percent; but on the Explorer it is 60 percent because its engine is bigger than 4.0 liters. Buyers also pay 20 percent VAT.
Winner and Daewoo, which will run the old national AvtoZAZ company, have invested a lot in Ukraine. Whether it will pay off is anyone's guess, said Carol Thomas, an eastern European specialist at LMC.
'It is a huge country, but Ukraine still has no links with the EU and it's not with Russia either,' said Thomas. 'It's very isolated. We don't know who will buy these cars.'