Results Achieved in the Automotive Industry in the Republic of Uzbekistan in 2016-2021

The automotive industry in our country is developing year by year. The automobile industry is one of the leading sectors of the automotive industry. It plays an important role not only in the growth of the country’s economy, but also in the development of other sectors of the economy that are to some extent involved in the field of engineering, as well as in the development of scientific and technological development. In addition, the development of this industry will serve to further increase the number and quality of highly qualified specialists: engineers, managers, financiers and others. This in turn raises the relationship between people in society to a new level by raising the level of knowledge and culture of young people.

 

The automotive industry is one of the areas most affected by the COVID-19 pandemic worldwide. According to the reports of the insurance company Euler Hermes, after the transport sector, the biggest negative impact falls on the automotive and mechanical engineering sectors. According to the latest forecast of the rating agency Moody’s, the global car market will shrink by 20% in 2020.

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Production

It is no exaggeration to say that the impact of the pandemic on the Uzbek automotive industry has been relatively mild. In 2020, enterprises operating in the automotive industry produced a total of 33,718.9 billion soums worth of vehicles, trailers and semi-trailers. In 2016, this value amounted to 4,112.3 billion soums, the growth rate was 8 times. At the same time, in 2016, the automotive industry accounted for 3.7% of total industry, in 2020 this figure was 9.2%, which in turn indicates that the share of the automotive industry in total industry increased by 5.5 percentage points between 2016 and 2020.

In particular, in 2020, 280,080 cars (growth rate + 217.7%), 642 buses (growth rate -29.3%), 4,163 trucks (growth rate + 30.1%), 673 tractors (growth rate -6.5%), and 41 special vehicles were produced. Today, Uzbekistan is the only country in Central Asia that produces a full range of passenger and commercial vehicles. At present, more than 85 enterprises in the country operate in the automotive industry and cooperate with more than 200 foreign companies and organizations in this field. Today, the industry employs 28,000 people.

 

Foreign Trade

As a result of the liberalization of the foreign exchange market, the creation of a number of conditions by the state to support the automotive industry, the dynamics of foreign trade in the automotive industry in 2016-2020 has developed rapidly. The huge shifts in the engineering industry in Uzbekistan are reflected in the growing demand for domestically produced vehicles in world markets. In 2016-2020, the exports of Uzavtosanoat amounted to $639.5 million. According to statistical analysis, in 2016, exports amounted to $ 55.1 million, while last year this value increased to $208.9 million, an increase of 4.1 times.

In particular, last year exports of cars worth $170.7 million (18,552 units), buses ($147 million) and trucks worth $11.9 million (780) were exported.

 

In 2020, vehicles worth $168.6 million were exported to Kazakhstan, $7.2 million to Azerbaijan, $5.7 million to Afghanistan, $4.9 million to Kyrgyzstan and $3.6 million to the Russian Federation.

 

If we take into account the value of foreign imports in the automotive industry, in 2020, a total of $ 1,838.3 million worth of vehicles were imported, which in turn increased by 2.1 times compared to 2016, a decrease of 13% compared to 2019. In particular, by 2020, cars worth $475.1 million (25,766 units), trucks worth $190.4 million (4,576 units) and buses worth $16.7 million (445 units) were imported.

 

Investments

As a result of measures taken to create a competitive environment in the automotive industry and create a favorable investment climate, a number of high-value investment projects have been implemented in the automotive industry over the past five years.

In particular, from 2016 to 2021, Uzavtosanoat invested a total of 392.3 million soums. Investment projects worth USD were implemented:

- $120.6 million in 2016;

- $65.1 million in 2017;

- $21.8 million in 2018;

- $70.2 million in 2019;

- $114.6 million in 2020;

 

Reforms in the field

In the last 5 years, significant reforms have been made in the automotive sector. In particular, the following achievements were made:

- The volume of car production increased by 3 times and reached 280,000;

- Long queues for the purchase of cars have been eliminated;

- The "honesty vaccine" was introduced in the industry and deep-rooted corruption was eliminated;

- In order to strengthen competition in the industry, the production of German Volkswagen cars from the world's largest brands has been launched in Jizzakh region;

 

These results are being achieved through the economic policy pursued by the President of  Uzbekistan and the government, as well as measures taken in the automotive industry.

 

In particular, the President of the Republic of Uzbekistan No. PP-3028 of 2017 "Measures for further development and further improvement of management of the automotive industry in 2017-2021" and the Cabinet of Ministers of the Republic of Uzbekistan No. PP-537 of 2018 "Acceleration of further improvement and development of management in the automotive industry.

The following results were achieved in accordance with the decisions of:

- Production of passenger cars has reached 220 thousand units;

- More than 250 car parts were localized;

- Based on world experience, the development of draft resolutions on the introduction of industrial collection and disposal fees has begun.

 

In addition, in order to ensure the rapid development of the automotive industry and increase its investment attractiveness, the introduction of modern market mechanisms and management methods based on best international practices, the following indicators are set for the development of the automotive industry in 2019-2023:

- increase the production of cars to 350 thousand units;

- increase the level of localization of cars to an average of 60%;

- increase the production of trucks and buses to 10,000 units;

- Update the range of car models, including the production of a new modern model of the car, which is affordable for the general population.

As a result of efforts to attract a number of foreign investments and establish international agreements with them in order to increase competitiveness in the automotive industry, the production of vehicles such as LADA, Volkswagen and UzPCA from Russia, France and Japan is launched.

Mir Akhmadov Musharraf, Center for Economic Research and Reforms (CERR)

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