Mon, 26 Jul 2021

Volkswagen, Skoda to set up shop in Uzbekistan

01 Jul 2020, 04:49 GMT+10

"You can have any color as long as it's black" is what Henry Ford reputedly used to tell buyers about his Model T cars.

Aspiring motorists in Uzbekistan have traditionally had a little more choice than that, but not much. Most people drive cars churned out of the GM Uzbekistan factory, which produces the 10 or so models that account for almost all the vehicles one sees on Uzbek roads.

But under a deal overseen last week by President Shavkat Mirziyoyev, a factory in the city of Jizzakh will from 2022 begin to produce cars under the Volkswagen and Skoda brands. The aspiration is for the plant to turn out up to 20,000 units annually.

Before then, there are plans to start up the import of models made by those companies, which should add a little more variety to the roads.

The Jizzakh plant will make the Volkswagen Caddy model, which is a people-carrying leisure activity vehicle. Volkswagen Crafter vans, urban light SUV-style Volkswagen Tiguans and Skoda Octavia family saloons are slated to follow.

Parts for the cars will in turn be produced at around 30 factories and 160 small and medium companies operating under the auspices of Uzavtoprom, the Uzbek Association of Automotive Industry Enterprises.

Skoda and Volkswagen are not the only new entries onto the Uzbek market.

Another company, Japan's ISUZU, began assembling D-Max pickup trucks in Samarkand in November 2019 and is expected to produce a modest 500 units this year.

Even though around 271,000 vehicles were produced in Uzbekistan last year, it is far from straightforward for motorists to get their hands on one.

Buying inexpensive models like the Chevrolet Spark (prices range from $7,200 to $9,100) or the Chevrolet Cobalt ($9,400-$11,300) requires weeks of waiting and the payment of 85 percent of the cost upfront.

Matters are complicated by the government's protectionist policies. Importing a foreign-made car can entail customs duties equivalent to the original price tag itself. For that reason, foreign-made cars are still quite a rare sight.

Things are a little easier for Russian car exporters, whose vehicles get a more modest 24 percent customs duty slapped on them. And that concession has only been won by virtue of the fact that Russia is a primary destination for Uzbek cars.

Sales of Lada models are growing. In 2018, 2,600 units were sold in Uzbekistan. That went up to 6,600 in 2019.

Despite the cost, there is an evident, developing appetite for foreign-made models. In 2019, Uzbekistan had imported $400 million worth of light vehicles, a 37.9 percent increase on the previous year.

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