Uzbekistan to buy out General Motors’ stake in GM Uzbekistan

Uzbekistan to buy out General Motors’ stake in GM Uzbekistan
Hillary Clinton behind the wheel of a Chevrolet Spark on her visit to GM Uzbekistan's Tashkent plant in 2011.
By Kanat Shaku in Almaty. June 1, 2018

Uzbekistan plans to acquire GM’s "remaining" 10% stake in Uzbek-US joint venture GM Uzbekistan, the chairman of Uzbek state-owned vehicle holding company Uzavtosanoat, Umidjan Salimov, told Gazeta.uz news agency on May 31.

GM Uzbekistan was thought to be 75%-owned by Uzavtosanoat and 25%-owned by General Motors—there has been no news of Uzavtosanoat having already bought 15% of the company from GM. Salimov neither specified when and at what price his company purchased the bigger portion of GM’s shares in the automaker nor what price it planned to pay for the remainder.

In what was seen as the first official criticism of the flagship company, Uzbek President Shavkat Mirziyoyev criticised it this month for failing to create jobs despite enjoying tax and other benefits for decades, Reuters reported. Mirziyoyev said the plant—visited in 2011 by Hillary Clinton when she was US secretary of state—was “useless” because it had no competitors and, according to AKIPRESS, said it was not profitable.

The company was formed in 1996 as UzDaewoo Auto but was renamed GM Uzbekistan in 2008. It is much dependent on imported parts and until last year sold cars domestically for foreign currency. Because of high demand, ordinary Uzbeks have been known to endure months-long waiting lists in order to buy a vehicle.

GM Uzbekistan’s passenger car output jumped by 58.1% y/y to 135,470 units in 2017. The automaker increased output of its Nexia model cars by 7.4% y/y to 34,540 units in 2017, the Damas by 33.8% y/y to 22,490 units and the Spark by 26.1% to 22,360 units.

Last October, it was reported that GM Uzbekistan was  in talks on launching production of Uzbek cars under the Ravon brand in Russia. It was also said to be discussing the potential production of Russian KAMAZ vehicles in Uzbekistan. The automaker sells cars under the Chevrolet brand locally and the Ravon brand outside Uzbekistan. It has an annual full capacity of 250,000 vehicles per year.

The company is one of the main Uzbek exporters to the Russian market and has long been seen as a barometer of trade between the two countries.

Gazeta.uz also quoted Salimov as saying GM Uzbekistan was in talks with major carmakers including Volkswagen about setting up plants in Uzbekistan, the most populous nation in Central Asia, with 32mn inhabitants. Uzbekistan is also discussing buying GM’s 70% stake in another joint venture which produces engines, he added.

Uzbek officials hope the attraction of Uzbekistan to foreign investors is rising in line with the economic reform efforts of President Mirziyoyev, including a currency liberalisation, a great boost when it comes to the repatriation of profits.

GM Uzbekistan’s car sales on the Russian market grew nearly twofold to 4,676 units in annual terms in the first four months of 2018, according to latest figures released by Russia’s Association of European Businesses (AEB).

The automaker saw its car sales in Russia jump by 45.2% y/y to 15,078 units in 2017.

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