Central Asia Autos Report 2010

The effects of the economic downturn were seen significantly at the beginning of the year with car production and sales plummeting across the regions. In Uzbekistan, US-based General Motors Company (GM)’s local joint venture (JV) GM Uzbekistan saw production slumping at its Asaka plant by 13.9% in the first two months. However, throughout 2009, output picked up and the company was able to post a year-on-year (y-o-y) growth of 7.8% for the period of January to July. There is uncertainty as to how the bankruptcy of GM will affect operations in Uzbekistan. GM filed for bankruptcy in June 2009, but emerged from Chapter 11 bankruptcy protection the following month. While the government of Uzbekistan is adamant operations will remain unchanged, there is the possibility of a buyout of GM’s share in the company with speculation that automotive supplier Magna and Russian based Sberbank are interested.

In October 2009 an Uzbek-South Korean enterprise was launched to produce light and lamp components for cars in Namangan. The business, UzChasys, is a 70:30 JV between Kazakh car firm O’zavtosanoat and South Korean-based Chasys. The company is contracted to produce lighting components for vehicles produced at the GM Uzbekistan plant, but the technology used could also be adapted to produce light fittings for a number of different models. Annual output capacity is anticipated to be 250,000 units and a return on investment is expected to be seen after five years. Despite the economic downturn, Chang so Dong, president of Chasys, is confident the market is growing in Uzbekistan and that there is the potential to expand into other automobile components such as chassis and lifting jacks.

In April 2009 it was announced that Indian industrial group Ashok Minda Group, based in New Delhi, would be expanding its operations by setting up a production facility in Uzbekistan as a means to supply components to significant auto companies in Russia and the Commonwealth of Independent States.

Operations are expected to begin by the end of 2009, with sales expected to reach US$32.55mn by 2010.

Ashok sees the development as a natural progression of their aggressive expansion plans which they hope will ultimately see them eventually move into the European markets.

Meanwhile, in September 2009 it was reported that German firm MAN Nutzfahrzeuge and Uzbekistan's state-owned UzAvtosanoat had initiated a JV to manufacture trucks in Uzbekistan. Components will be imported from India and Germany and then assembled in Uzbekistan. Initial production should begin by the end of October 2009 with an expected output of around 500-1,000 trucks per year. MAN Nutzfahrzeuge already has a presence throughout Central Asia with subsidiaries in Kazakhstan and local partners in Turkmenistan. While there is some market stability seen in the automotive sector in Central Asia, analysts believe the market has not yet bottomed out and it will be 2010 before a recovery will be seen.