SNAPSHOT OF THE AUTOMOTIVE SECTOR

The automotive industry of Uzbekistan is undergoing a period of rapid transformation, driven by economic growth, new investments, and structural reforms aimed at creating a competitive, export-oriented industrial base. As of early 2024, the total number of registered vehicles in the country reached approximately 4 million units, of which 3.8 million are passenger cars. The domestic automotive market remains one of the largest industrial segments of the national economy, contributing around 1.1 percent to GDP and employing about 29,000 people. In 2023 alone, 456,000 new passenger cars were sold, reflecting a 33 percent increase compared to the previous year, while sales of used cars grew by 13 percent. UzAuto Motors continues to dominate the market with an 84 percent share, but its position is now being challenged by new entrants and joint ventures that are reshaping the structure of the sector.

Macroeconomic indicators provide a supportive background for the automotive sector’s growth. Uzbekistan’s GDP reached USD 90.8 billion in 2023, with a real growth rate of 6 percent and a per capita income of USD 2,495, which is projected to rise to USD 4,198 by 2030 under the national “Uzbekistan 2030” strategy. Investments in fixed capital exceeded USD 30 billion, including USD 7.2 billion of foreign direct investment, representing roughly a quarter of total investment inflows. Rising incomes, expanding access to consumer credit, and demographic growth – the population is projected to surpass 40 million by 2029 – are all stimulating domestic demand for vehicles. The automotive loan market alone reached USD 3.1 billion in 2023, growing by 87 percent compared to the previous year. However, achieving the goal of one car per family by 2030, corresponding to roughly six million vehicles or 240 cars per 1,000 people, will require continued financial sector deepening and investment in production capacity.

Uzbekistan’s automotive industry, established in 1994 with the creation of Uzavtosanoat, has evolved through four main phases. The first phase, between 1994 and 1999, marked the foundation of the industry with Daewoo CKD assembly in Asaka and the launch of SamKochAvto in Samarkand. The second phase, from 2007 to 2015, saw the introduction of Chevrolet through GM Uzbekistan, the creation of Man Auto-Uzbekistan, and the launch of the Ravon brand. The third phase, from 2018 to 2022, reflected a shift toward liberalization and diversification. Uzavtosanoat repurchased GM’s 25 percent stake, while ADM Jizzakh was launched as one of the most modern SKD plants with an annual capacity exceeding 100,000 vehicles. This period also saw agreements with international partners such as GM International and Hyundai, aimed at expanding production capacity to 500,000 units per year. The current phase, beginning in 2023, has been marked by the localization of foreign brands and the emergence of electric and hybrid vehicles. BYD Uzbekistan began operations in 2023, introducing hybrid and electric models, with plans to reach 50,000 units of annual output in 2024 and eventually 500,000. Asaka Motors launched production of EXEED vehicles and several Hyundai models such as Elantra, Tucson, Sonata, and Santa Fe. Kia Sonet production also began with an annual target of up to 100,000 units. These developments, alongside ADM Jizzakh’s growing role as a regional manufacturing hub, demonstrate Uzbekistan’s ambition to position itself as a major automotive producer in Central Asia.

The market outlook to 2029 has been modeled by KPMG under three scenarios—target, dynamic, and conservative—each reflecting different assumptions about income growth and access to car financing. In the target scenario, with annual GDP growth of 5–6 percent and active credit expansion, the compound annual growth rate (CAGR) of the primary car market is projected at 18.8 percent, with the number of cars per 1,000 inhabitants reaching 240. Under the dynamic scenario, where growth continues but moderates as the market matures, the CAGR is expected to reach 15.4 percent, with 214 cars per 1,000 people. In the conservative case, assuming slower income growth and limited access to credit, the CAGR would drop to 7.4 percent, with market saturation occurring at around 160 cars per 1,000 people. Across all scenarios, the expansion of car ownership will be closely linked to the development of auto credit, leasing, and other financing tools, which together may require between USD 4.6 and 18.5 billion annually in new lending and investment by 2029.

The domestic market is still strongly influenced by the pricing of so-called “people’s cars” such as Chevrolet Cobalt, Lacetti, and Damas, which serve as benchmarks for both new and used vehicle prices. These models retain their value over the first two years of use, while vehicles in the premium segment tend to depreciate more quickly, at a rate of six percent or higher annually. Dealer margins typically reach up to 15 percent, while import costs for completely built units, including customs duties and certification, can account for up to 70 percent of total value. The majority of cars are purchased directly rather than through financing—67 percent of new car sales and 78 percent of used car sales in 2023 were made through direct purchases, while around 19 percent of transactions involved credit or leasing.

The structure of demand in Uzbekistan is led by households and individual buyers, who own around 3.4 million vehicles, followed by commercial operators such as taxi and logistics companies, corporate fleets, and government agencies. The most popular models for family use are Chevrolet Cobalt, Gentra, Nexia, Spark, and Damas, while the Damas and Labo dominate small business and transport segments. The used car market remains robust, supported by high prices for new vehicles and a growing number of digital sales platforms. More than half of all vehicle transactions in 2023 were conducted online through platforms such as OLX and Avtoelon. Meanwhile, online car marketplaces like Uzum Auto and Alif have started to compete with traditional dealerships by offering multibrand and Islamic financing-based sales, respectively. Official dealers continue to play an important role, with over 190 centers across the country—48 percent representing Chevrolet, followed by Chery, Haval, Renault, Kia, Lada, and BYD through the distributor Roodell.

The government has adopted an active regulatory and fiscal policy to stimulate industry development. Import tariffs for new small-engine cars were reduced to 0–5 percent until 2026, while electric and hybrid vehicles benefit from complete exemption from customs duties and utilization fees until 2030. A special program was launched to build at least 2,500 charging stations by 2024 and integrate them into new commercial and infrastructure projects. Producers such as BYD and ADM Jizzakh receive additional incentives, including exemption from income tax and customs duties on imported components, as well as state compensation for interest rate differentials on loans. At the same time, the authorities are implementing the “Ecological Transport” system to monitor emissions, classify vehicles by environmental impact, and gradually introduce regional environmental zones beginning in 2024. Other decrees aim to simplify vehicle certification and dealership operations, reduce customs complexity, and introduce a trade-in system for locally produced vehicles.

Key drivers of the market’s continued expansion include the overall economic growth and rise in consumer purchasing power, increased localization and investment by foreign manufacturers, the extension of tax incentives, improved credit availability, and insufficient development of public transportation infrastructure, which keeps private car ownership a necessity for mobility. The growing popularity of electric vehicles and the government’s commitment to a green economy are further accelerating diversification within the sector. Nevertheless, several structural barriers remain, including high import taxes on larger-engine vehicles, limited access to auto loans for low-income consumers, seasonal fuel shortages, and evolving environmental standards that could restrict imports of noncompliant vehicles. The potential accession of Uzbekistan to the World Trade Organization could reduce import tariffs to around 10 percent, which would intensify competition and potentially reduce domestic production efficiency by up to one percent, although in the long term it could facilitate access to cheaper equipment and parts and expand export opportunities.

In 2023, Uzbekistan had only 103 cars per 1,000 people, compared to 220 in Kazakhstan and 327 in Russia, indicating substantial untapped potential. With sustained investment by companies such as UzAuto Motors, ADM Jizzakh, BYD Uzbekistan, Asaka Motors, and other joint ventures, the national market is on course to double in size by the end of the decade. If current trends continue, Uzbekistan could become not only self-sufficient in passenger car production but also a net exporter of vehicles to neighboring markets in Central Asia and the CIS by 2030.