Fitch Ratings has affirmed Uzbekistan’s sole major car manufacturer UzAuto Motors' (UAM) Long-Term Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. It has also affirmed UAM's senior unsecured bonds at 'BB-'/'RR4'.

The rating agency said that the “affirmation reflects Fitch's view that the strength of linkage with the Republic of Uzbekistan (BB-/Stable) and its incentives to support UAM remain strong, leading to the equalisation of its rating and Outlook with that of sovereign, in line with Fitch's 'Government-Related Entities Rating Criteria' (GRE). Fitch assesses UAM's Standalone Credit Profile (SCP) at 'b'.”

“Our evaluation of the strong socio-political implications of a possible default of UAM on the sovereign reflects UAM's dominant market position in Uzbekistan's car manufacturing industry. In addition, UAM and related parties have a large domestic workforce of about 30,000 staff, which could lead to socio-political tensions in case of default,” Fitch noted.

Fitch said it viewed the status, ownership and control linkage of UAM with the state as strong due to full state ownership and operational control by the parent over the company's capex and operational strategy.

Fitch has revised its medium-term Ebitda margin expectation down to 9% from 10.7% for 2025.

UAM still remains by far the main producer of passenger cars in Uzbekistan, giving it a dominant position in the country. Combined with high capex in production facilities and favourable regulation, this provides significant barriers to entry for potential competitors and supports the company's local market share.

According to Fitch analysts, the ongoing liberalisation of the Uzbek economy could increase competition from foreign competitors and erode UAM's sales and profitability as well as their assessment under the GRE criteria.