Uzbekistan. Lada boomed in 2019 in a steady growing market

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Uzbek Vehicles Market
Lada-4x4_Vision_Concept-2018

Uzbek Vehicles Market in 2019 benefit from the cut of import duties applied since January, reporting the arrival of several new players, with Total sales at 190.164, up 3.5%. The domestic producer, Chevrolet lost market share while the fastest growing brand ranked in third place and was Russian Lada, up 150.1%.

Economic Environment

Uzbek economy sustained a solid pace of expansion in the third quarter, according to cumulative data for January–September released by the country’s statistics committee. Although growth slowed slightly compared to January–June amid a slight deceleration in construction output, activity in the industrial, and transport and communication sectors edged up in Q3.

Moreover, merchandise exports accelerated in the quarter on buoyant Chinese demand. However, momentum likely softened in the fourth quarter, as both industrial production and merchandise exports growth eased in October–November.

Automotive industry evolution

Uzbek automotive sector is one of the primary industrial areas in the country, but in recent years is struggling for the crisis or the evolution of the CIS area, the principal area of export for the local made production. Indeed, the domestic market has always been controlled by the state-owned GM Uzbekistan, forcing the customers to high price, long wait, low technology and low safety models. But the absence of internal competition has not pushed the local plants to be efficient in terms of quality and cost and compete in foreign markets is hard.

Due to the huge import fees, the domestic market is totally controlled by GM Uzbekistan with just marginal space left to other players. However, key steps towards a market liberalization started to be taken in 2017. As far as GM Uzbekistan, production raised at 135.471 units and a new sales system were in place. Actually to buy a GM Uzbekistan model the only way is to access at Chevrolet.uz portal. All GM models prices have been increased by 25-35 per cent in June 2017 while, following the liberalization of monetary policy, since September vehicles prices are in national currency. 

In the last two years, the Government reduced excise tax on vehicles by 26% in order to neutralize the consequences of the harmonization of local currency price with the exchange rate to US dollar in the “grey market”. However, imported vehicles prices changed marginally, while domestic price kept growing.

In the 2018 new key steps have been taken to open the industry and the stated-controlled, Uzavtosanoat, bought out 100% of GM’s shares in the Asaka car plant. Then bilateral agreements have been signed with Korea, China and with PSA, Hyundai and Volkswagen to allow the start of modern vehicles production (since 2019, Peugeot Boxer, Citroen Berlingo and Volkswagen Amarok) released for internal sales but aiming to export near 90% of production.

Market Trend

Sales in the 2018 grew up 10% at 139.902 and the trend remained positive in the 2019 too, thanks to the reduction of import duties and VAT.

Indeed, since January 1, 2019 new rules are in place to import new vehicles, while the Uzbekistan is proceeding step by step on opening the market aiming to join the W.T.O. in short. The new rules cancelled the former 120% import duty, leaving a 20% duty for luxury vehicles and totally cancelling taxes on electric vehicles. The Uzbekistan VAT is 20% and must be paid on top of the import duties.

As expected, the market reacted quite well and sales accelerated following a robust demand across all the year.  Indeed, in 2019 Total sales have been 190.164, up 3.5%.

In the competition arena, the easier access to imported vehicles have opened the doors to a wide group of new players, which are now developing their operations and achieving the first sales results, while the domestic brands, UZDaewoo grew moderately, while Chevrolet lost 3.1%. The most active brand was the Russian Lada (controlled by Renault) which boomed with sales up 150.5%.

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