Kazakhstan Builds Up Its Vehicle Export
Despite an overall export plunge deliveries of local motor vehicles go up
2020 turned out to be a difficult year due to a global slowdown of the economy caused by spread of COVOD-19 pandemic and related quarantine restrictions. Falling demand for raw materials has underlain an overall decline in Kazakhstan’s export, however processing industry has demonstrated a contrary trend.
There are cheering pieces of news as well
Consequences of the pandemic have exerted marked impact on Kazakhstan’s export. As the National Statistics Bureau says, in 2019 it made around $58 billion, while in 2020 it was slightly below $47 billion. This is attributed to a decrease in supplies of raw materials from abroad due to a falling demand for it in partner countries of Kazakhstan and because of a drop in prices for products.
However, local companies operating in engineering industry managed to increase their export. For instance, according to official statistics, in 2019 Kazakhstan’s car makers exported 2.85 thousand light cars for an amount of $56.2 million, while in 2020 they managed to boost volumes up to more than 7,000 units worth $130.74 million respectively.
Artur Miskaryan, Deputy Chairman of Management Board of a sectoral union of enterprise – KazAutoProm, highlights growing sales of Kazakhstan’s cars both locally and abroad.
‘Sales of new vehicles in Kazakhstan have grown for past years and for the most part it is because of a growing demand on locally produced machinery. Last year, despite all the costs and expenses caused by the pandemic, the market soared by 25%, almost 90,000 brand new vehicles were sold,’ he says.
Along with that, 71.3% of the buyers have opted for vehicles from local producers. In the opinion of Artur Miskaryan this means that buyers do not have any prejudices against vehicles made in Kazakhstan.
‘In 2017, Kazakhstan’s car makers gained experience of vehicles supplies to the neighboring countries. Today, we see that products from local producers can enjoy demand abroad as well. Of course, the main task of the producers is to secure a footing on the local market, especially given a condition of vehicle fleet and level of automobilization. However, building-up of export supplies opens up prospects of an absolutely different level,’ points out Deputy Chief of KazAutoProm.
Building-up supplies
Almaty-based Hyundai Trans Kazakhstan and Kostanay-based SaryarkaAutoProm have found their niche in export supplies of vehicles from Kazakhstan.
Hyundai Trans Kazakhstan is a subsidiary company of Astana Motors. The company says on its website that the new manufacture is ‘a strategic facility to promote local automotive industry which allows to saturate Kazakhstan’s market with new vehicles and ensure their export to the CIS countries.’
The plant was launched not long ago. Ground-breaking ceremony of the future enterprise took place on 21 April 2019. A year later, the first DKD assembly vehicle rolled off the production line.
In fall 2020, CKD assembly line was launched, including welding and painting operations. Capacity of the facility is 30,000 vehicles at the first stage and up to 45,000 vehicles at the second stage. Hyundai production line includes such models as Accent, Elantra, Sonata, Creta, Tucson and Santa Fe.
Total volume of investments in production make around 28 billion KZT, where 30% are own funds of Astana Motors and 70% are raised from Development Bank of Kazakhstan and DBK-Leasing. In the future, it is planned to build a car component plant in order to exceed 51% localization in the produced motor vehicles.
The enterprise pursues saturation of the local and foreign markets. Development Bank of Kazakhstan has financed pre-export operation of Hyundai Trans Kazakhstan for delivery of Hyundai vehicles to Uzbekistan. 15-billion KZT revolving credit facility was provided for 36 months against loan insurance by export insurance company KazakhExport for an amount of 6.9 billion KZT (subsidiary of NMH Baiterek JSC, an organization subordinate to the Ministry of Trade and Integration of the Republic of Kazakhstan).
Agreements for delivery of vehicles assembled in Kazakhstan to Uzbekistan were achieved through support of Kazakhstan’s government. deliveries of Hyundai Accent Since to the neighboring country were started in early 2021. Supplies will grow as far as the enterprise builds up its capacities.
Another major exporter is SaryarkaPromAuto experienced in supplies of its products to Russia, Belarus, Uzbekistan and Tajikistan. It is the first production site in the country that has launched CKD assembly of light vehicles.
Kostanay-based producer manufactures light vehicles of such brands as Peugeot, JAC, Chevrolet, RAVON and UAZ. In November 2020, one hundred thousandth vehicles rolled off the assembly line. It was crossover JAC S3. SaryarkaAutoProm began supplies of this particular vehicle for upgrade of a taxi fleet in Dushanbe in 2017 with support of KazakhExport.
SaryarkaAutoProm sells vehicles not only in Kazakhstan but also to foreign countries. There, the company avails of such tools from KazakhExport as export trade financing, export loan insurance and incoming re-insurance.
The company commenced its cooperation with KazakhExport in 2017 when using KazakhExport tools it delivered motor vehicles to Tajikistan. Later, there were joint projects for vehicle exports to Russia, Uzbekistan. Belarus was a new export direction last year.
Since early 2021, KazakhExport insured obligations of SaryarkaAutoProm to its creditors for performance of export contracts for an amount of 10 billion KZT.
With striking potential
Existing experience of export of Kazakhstan’s vehicles and also appearance of new producers allow to suppose that in the future deliveries to foreign countries will grow. Kazakhstan’s business pro-actively covers new markets boosting delivery volumes and expanding its model lineup. In 2020, it entered the market of Belarus, continues its activities in Uzbekistan, there is also potential in Kyrgyzstan which does not have its own automotive industry. A kind of external expansion is achieved, including due to state support of the sector.
‘Engineering on the whole is one of priority directions in export support of our country. Since 2017 the company has undertaken insurance obligations to support exporting companies for an amount of 62 billion KZT, including 34.8 billion KZT in corona-struck 2020. This includes nearly 24 billion KZT of support for local car makers in 2020–2021,’ says Ruslan Iskakov, Chairman of Management Board of KazakhExport.
He says that local car makers have a high potential to go for export and state development institutions are ready to provide them with financial and insurance and non-financial support.
Source: https://kursiv.kz/news/otraslevye-temy/2021-03/kazakhstan-naraschivaet-eksport-avtomobiley
Photo: sap.com.kz
