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Kazakhstan-based car makers facing obstacles to car exports to Russia

23 july 2014, 12:12
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Kazakhstan-based car making facilities have been unable to export any sizeable batches of cars to the other Customs Union member states (Belarus and Russia) or any other states, a Tengrinews.kz journalist reports, citing Oleg Alferov, Director of Qncepto Consultancy as saying. According to him, not a single one out of the current 5 car making facilities has been able to export its cars, excepting minor one-time supplies. Markets other than Russia’s haven’t been tested yet.

“With the Customs Union in place, Russia has been the most prospective market. However, Russia-made cars account for 55% of the Kazakhstan’s market. Kazakhstan-made cars haven’t tapped into the Russian market”, Mr. Alferov said.

One of the reasons behind the situation has been the disposal fee imposed on Kazakhstan’s car makers when exporting cars to Russia. “Until recently Russia’s car makers have been exempted from the disposal fee in Kazakhstan. A number of Kazakhstan-based car makers also enjoyed the same perk in Russia. When Russia entered the WTO, European car makers had Russia abolish the incentives. Now all the market players have to pay the disposal fee. Russia has found a way out through introducing state subsidies to compensate for the disposal fee (…) on the sidelines of joint events, reps of Russia’s car makers have been advising their Kazakhstan peers to introduce similar measures”, the expert elaborated.

The same reasons have been cited by reps of Kazakhstan-based Asia Auto and Asia Auto Kazakhstan car making facilities. Last year the two facilities obtained Russia’s certificates confirming the cars comply with respective Russia’s quality standards. A pilot batch of 96 Chevrolet Captiva cars assembled in Ust-Kamenogorsk worth $1.7 million was sent to Russia.

“The crossover cars were successfully sold in Moscow; however, the Kazakh car makers lost their opportunities shortly. With the disposal fee in place, cars made in Russia have an advantage over Kazakhstan-made cars in terms of price (…) so far the Customs Union member states have failed to concert their efforts aimed at supporting the car making industry”, Erik Sagymbayev, Director of Asia Auto, said.

“However, we have no doubts, the issue will be resolved by the Customs Union member states, and Kazakhstan-based car makers will be able to export to the Russian market (…) affordable crossover vehicles are expected to be supplied to Siberia and the Far East of Russia”, he said.

Reps of Agromash Holding and Saryarka Auto Prom, another two Kazakhstan-based car makers, said they hadn’t been exporting any cars yet. “The major model we are thing of exporting is SsangYong Nomad. We are in the process of trilateral negotiations with South Korea and Russia”, Andrei Lavrentiyev, AllurGroup President, said, adding that Russia, Azerbaijan and Belarus have been seen as the major prospective markets.

Kazakhstan’s car making industry should boost car production to 190 000 cars a year by 2019, the country’s Vice PM and Industry Minister Asset Issekeshev told a briefing at the President’s Service for Public Communication in May 2014.

“In the car making industry the task is to bring the number of cars from the current 37 000 to 190 000 cars a year, with the share of locally produced parts from raising from the current 30% to 50%. Car exports should be raised to 30% by that time”, he said when unveiling the draft Program of Industrial Development for 2015-2019.

Kazakhstan plans to assemble 60,000 cars this year, 50% up against 2013, Tengrinews reported earlier, citing Asset Issekeshev, the country’s Minister of Industry and New Technology, as saying February 6, 2014.
 


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