Central Asia: Chinese cars race ahead

Central Asia: Chinese cars race ahead
With a cherry on top. / CheryUzbekistan.
By Joanna Lillis for Eurasianet November 9, 2022

The first Chinese cars assembled in Uzbekistan are hitting the road, as Chinese companies expand manufacturing in Central Asia while Russian firms retreat under sanctions.

Four Chery-branded SUV models assembled at the ADM Jizzakh factory went on sale on October 27, Spot.uz reported.

Chery is offering soft credit to help customers afford prices ranging from $26,000 for the Tiggo 7 Pro model to $40,000 for the Tiggo 8 Pro Max. With a down payment of 25%, the interest rate is zero if paid off within 36 months or 7% within 48 months. Leasing is also available.

The Chery models are more expensive than vehicles manufactured locally by state-owned UzAuto Motors. The popular Nexia Chevrolet sells for around $11,000.

Chery plans to open 23 dealerships in Uzbekistan by 2024. The first is already working in Tashkent, and more are to open this year in Andijan, Fergana, Namangan and Samarkand.

Lured by perks like lower customs duties, in spring Wuhu-headquartered Chery Automobile Co signed an agreement to assemble cars at the factory in the Jizzakh Free Economic Zone. Assembly began in August.

Chinese manufacturer BYD Auto also recently signed a deal on car assembly in Uzbekistan with UzAuto Motors.

Chinese companies are spying a gap in Central Asian markets owing to international sanctions over Moscow’s war in Ukraine that are crippling Russia’s automobile industry.

Many popular Japanese and European models sold in Kazakhstan were previously manufactured in Russia, where factories have had to suspend production due to sanctions. The Russian government has also banned exports of some spare parts.

With delivery of cars from China to Kazakhstan taking no more than 18 days, Chinese manufacturers are well-placed to fill the gap.

So are Kazakh factories. Manufacturing in Kazakhstan was up 25% in the first three quarters of this year, according to data from the Association of Kazakhstan Automobile Business (AKAB).

Output at SaryarkaAvtoProm in northern Kostanay Region, which assembles Chinese cars under the JAC brand, rose by over 28%.

JAC was the fifth-most popular selling car in Kazakhstan in the first nine months of this year, according to AKAB data, behind Chevrolet, Hyundai, Kia and Lada.

The rise in sales of Chinese cars in Kazakhstan began even before Russia invaded Ukraine.

Chinese brands accounted for 3.4% of new cars sold in Kazakhstan in 2021, or more than 4,000 units, double the figure from the previous year.

Chery has done particularly well since entering a distribution agreement with Astana Motors last year, quickly becoming one of Kazakhstan’s top 10 selling brands.

In September Chery sales increased more than any other brand, the AKAB said, propelling it into fifth place for sales. JAC was in sixth place.

“The six Chinese car brands represented in Kazakhstan sold almost 5,000 in the eight months of 2022,” Astana Motors said last month. The figure has already outstripped last year’s total sales.

During a visit to Kazakhstan by Chinese President Xi Jinping in September, Astana Motors signed an agreement on construction of a factory to produce cars under the Chery, Changan and Haval brands, which it already distributes.

After it comes onstream in 2025, the plant in the Almaty industrial zone will have a production capacity of 90,000 cars per year, of which 60% will go for export to post-Soviet countries.

Russia’s Lada, always popular in Kazakhstan, still occupied sixth place for sales last month – but they were down 55%.

As for performance since the start of the year, Lada ranks fifth, with Chery and JAC snapping at its heels in sixth and seventh place, respectively.

Joanna Lillis is a journalist based in Almaty and author of Dark Shadows: Inside the Secret World of Kazakhstan.

This article originally appeared on Eurasianet here.