Uzbek cars hinder development of Kazakhstani car manufacturing

Kazakhstani car manufacturers blame Uzbek cars for hindering the development of the local car production, Tengrinews reports.

Yerik Sagymbayev, President of the Kazakhstani car manufacturing company Azia Avto, said that for Kazakhstan to be able to export its production, the country had to work on its relations with its foreign trade partners, in particular with Uzbekistan. Kazakhstan had been the key market for Uzbek cars since 1990s, as UZ-Daewoo cars were exported to Kazakhstan on custom-free basis. As a result, Uzbek cars were among the top three most imported car makes in Kazakhstan.

Earlier this year, in February, Kazakhstan introduced a number of changes into its technical regulations limiting access of Uzbek cars to the Kazakhstani market. “But in just a couple of months Uzbekistan managed to get the new rules removed from the Kazakhstani technical regulations. After that in less than one month, 20 thousand cars were imported in Kazakhstan (from Uzbekistan). To put this in perspective, last year 13.3 thousand Uzbek cars were imported to our country.

"Let’s call a spade a spade: we are basically subsidizing Uzbek car manufacturing industry and getting nothing in return, not even a hypothetical opportunity to bring the cars assembled in Kazakhstan to the neighbouring market. I think the situation calls for some foreign trade justice. Either our Uzbek colleagues should give us customs-free access to their market or we should introduce similar barriers in regards to the Uzbek cars. I mean, the custom tariff and excise duties that are in place at the Uzbek border for us. Only then the balance will be restored,” the businessman said.

Oleg Alferov, Director of Qncepto consulting firm, said that in addition to Uzbek cars, Kazakhstani car manufacturers were affected by Ukrainian companies: Daewoo Nexia from Uzbekistan and Zaz Chance from Ukraine were flooding the Kazakh market.  “Until quite recently, Kazakhstan was subsidizing production of a South Korean shoot-off Opel Kadett in two post-Soviet countries. It was beneficial for Ukraine. Ukrainian AvtoZAZ got some of the spare parts from South Korea and some parts from Poland. Car body stamping, welding and paining was also done there. While Kazakhstan received dissembled, but complete car. Some of the cars are were even assembled. So, the Kazakhstan-based so called car manufacturer only had to finish assembling and do the customs clearance of the cars at zero rate,” Alferov said.

According to Alferov, Ukrain and Uzbekistan have shipped 33 thousand cars to Kazakhstan since the Customs Union (a customs free zone of Russia, Belarus and Kazakhstan) was initiated. “This almost equals to the whole last year's car sales of the Kazakhstani manufacturers. This starts one thinking if Uzbekistan and Ukrainian are lobbying the Kazakh government,” Alferov added.

Import of Chinese cars to Kazakhstan is also growing rapidly, and is not being compensated by export of Kazakh-assembled cars to China. Alferov explained that Chinese car manufacturers were eyeing access to the Russian market through Kazakhstan.

All in all there are five car manufacturers in Kazakhstan, but none of them can boast continues export of their products, only occasional deliveries. Russia is a priority market for these companies, but Russia is good at protecting its own producers. Kazakhstani manufacturers have to pay a utilisation fee in Russia, and experts cite the fee as one of the key barriers hindering the Kazakh exports to Russia.

Reporting by Vladimir Prokopenko, writing by Gyuzel Kamalova, editing by Tatyana Kuzmina