GM Uzbekistan in talks to launch Russian and Uzbek car assembly sites

GM Uzbekistan in talks to launch Russian and Uzbek car assembly sites
GM Uzbekistan's facelifted Chevrolet Aveo T250 sedan was launched on the Russian market in 2016 as the Ravon Nexia R3.
By bne IntelliNews October 6, 2017

Uzbek-American automaker GM Uzbekistan is in talks on launching production of Uzbek cars under the Ravon brand in Russia, UzbekistanToday news agency reported on October 4.

The company is also discussing the potential production of Russian KAMAZ vehicles in Uzbekistan. The attraction of the most populous Central Asian nation as a destination for foreign investors is rising in line with the economic reform efforts of president-for-a-year Shavkat Mirziyoyev, including a currency liberalisation, a great boost when it comes to the repatriation of profits.

GM Uzbekistan is one of the main Uzbek exporters to the Russian market and amounts to a barometer of trade flows from Uzbekistan to Russia. It produces 10 car models under the Chevrolet and Ravon brands, including the Matiz, Lacetti (Gentra), Spark (R2), Nexia (R3), Cobalt (R4), Malibu, Captiva, Damas, Orlando and Labo.

"We are sure that this will definitely give results. Today, there are concrete agreements on the organisation of the production of Russian cars with KAMAZ, there are arrangements for the supply of components for KAMAZ, AvtoVAZ and UAZ. Now the possibility of creating production sites with other Russian automakers is being considered," said Minister of Foreign Trade Elyor Ganiev.

One of the car assembly plants under consideration to produce GM Uzbekistan cars is a General Motors plant in St. Petersburg, which has long not seen any production. The plant’s annual capacity amounts to 98,000 units.

GM Uzbekistan’s car sales on the Russian market plunged by over 40% in 2016 and 42% in the first half of 2017. Sales have been hurt by an overall decline in the Russian car market due to ongoing economic troubles in the country.

The continuing decline can also be partly traced back to Russia's introduction of a recycling duty on imported cars following its accession to the World Trade Organisation (WTO) in 2012. This levy has driven up the price of Uzbek cars on the Russian market, making them less competitive.

Another reason behind the reduction in sales is GM Uzbekistan’s rebranding efforts. The company has officially ceased production under the Daewoo brand, which it used for exports to Russia and other countries until mid-2016. According to plans, the Ravon brand was to completely replace the Daewoo brand by the end of 2016.

Formed in 1996 as UzDaewoo Auto and renamed GM Uzbekistan in 2008, the company is owned by state-run vehicle holding company Uzavtosanoat (75%) and General Motors (25%).