Uzbekistan drives on

By bne IntelliNews September 21, 2009

Clare Nuttall in Almaty -

While car and truck manufacturers around the world are cutting back on production, Uzbekistan's automotive sector is bucking the trend, with General Motor's local joint venture maintaining a high level of output and several new companies setting up there this year.

Most recently, Germany's MAN Nutzfahrzeuge and Uzbekistan's state-owned UzAvtosanoat have launched a joint venture to assemble trucks in Uzbekistan. The venture, MAN AUTO-Uzbekistan, is 49% owned by MAN Nutzfahrzeuge and 51% by UzAvtosanoat. It will import components for heavy trucks from Germany and India for assembly in Uzbekistan. Output of between 500 and 1,000 vehicles a year is planned. The two companies have already carried out test projects and the first vehicles should roll off the assembly line in October.

The amount that MAN Nutzfahrzeuge is investing in the venture hasn't been disclosed. However, a spokesperson for the Munich-based company said it would contribute marketable products and guarantee operative support and supply of spare parts for the joint venture; UzAvtosanoat has contributed an existing assembly plant in Samarkand.

MAN Nutzfahrzeuge spokesperson Melanie Barbei tells bne that the move was a logical next step in the company's international growth strategy, as it already has subsidiaries in Ukraine and Kazakhstan, and is represented by local partners or dealers in Belarus, Azerbaijan, Armenia, Georgia and Turkmenistan. "Besides, of course, the logistical aspect is important for MAN Nutzfahrzeuge," Barbei says. "From our production plant in Krakow [in Poland] to Tashkent [in Uzbekistan], it is a distance of around 4,000 kilometres."

In addition to supplying the local market, the trucks assembled in Samarkand will also be sold in Tajikistan, Kyrgyzstan and possibly Kazakhstan.

General production

Meanwhile, production at the US-Uzbek joint venture, GM Uzbekistan, continued to grow in the first half of this year despite the drop-off in demand for new cars on international markets. In January-July, production was up 7.8% year on year, according to Uzbekistan's state statistics committee. The company produced a total of 108,426 vehicles in the first seven months of 2009, including 47,739 Nexia cars, 36,248 Matiz compact cars, 13,185 Damas minivans and 9,997 Lacetti cars.

GM Uzbekistan was set up in 2008 as a joint venture between UzAvtosanoat and GM. It is based at the former UzDaewoo Auto factory, which was taken under state control after the South Korean company went bankrupt.

Uzbekistan has a low level of car ownership and a rapidly growing population, which at over 27m is the largest in Central Asia. In addition to the local market, GM Uzbekistan was also intended to produce cars for export to Russia and other CIS markets. However, since the onset of the crisis, Russia has reduced car imports, and GM Uzbekistan is understood to have increased its supplies to the domestic market.

The Uzbekistan government is keen on the idea of more joint ventures in the sector, and has been working actively to promote this. Speaking at the signing ceremony for the MAN Uzbekistan joint venture, Ulugbek Rozukulov, deputy prime minister and chairman of UzAvtosanoat supervisory board, said that Uzbekistan aims to expand its domestic transport industry. "We are firmly convinced that our partnership with MAN will be successful. MAN's technologically mature and robust vehicles exactly match the demands of customers in Uzbekistan and surrounding markets," Rozukulov said. "Central Asia's markets are buoyant," he added.

UzAvtosanoat has several other projects in the works. In May, the state-owned company announced it would buy existing facilities in Andijan, where it would set up five new companies to produce components for GM Uzbekistan and Samarkand-based bus manufacturer SamAvto. UzChassis, a joint venture between UzAvtosanoat and South Korea's Chassis, will start production of car lamps in the fourth quarter of this year. Four other car components projects have been launched in the Ferghana region.

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