Kazakhs cars to be cheaper for Uzbek customers

Kazakhs cars to be cheaper for Uzbek customers

Uzbekistan has reduced the excise tax rate for new vehicles manufactured and imported from Kazakhstan since October 1, 2017.

The corresponding document was published on the website of Uzbek National Database of Legislation, Forbes Kazakhstan reported.

The decision was made in accordance with a resolution “On measures to further streamline Uzbekistan’s foreign economic activity” undersigned by Uzbek President Shavkat Mirziyoyev on September 29.

Under the document, the excise tax rate for new vehicles manufactured and imported from Kazakhstan (other than those intended for medical purposes) will be reduced to 2 percent of the customs value.

Earlier, Kazakh automakers complained to Uzbek National Economy Minister Timur Suleimenov that since 1996 the enterprises of the Uzbek automobile industry exported to the Kazakh market more than 85,000 cars worth $720 million. Cars of Uzbek manufacturers are not subject to customs duties and excises when crossing the border of Kazakhstan.

However, supplies of Kazakh automotive equipment to the Uzbek market equaled to zero as the access is blocked by harsh customs and tariff barriers.

Kazakhstan’s Union of automotive industry enterprises KazAvtoProm suggested then to consider the possibility of introducing response measures in relation to Uzbekistan.

The union asked the ministry to find negotiating opportunities for revising the Uzbek tariff policy in relation to Kazakh car industry products and assist in organizing its access to the Uzbek market in accordance with the principles of free competition.

Car manufacturing is growing at an unprecedented rate in Kazakhstan and significant expansion is planned in coming years.

As of November 2015, the number of registered vehicles reached 5 million automobiles, a 63 percent growth from 2013 (a 10 percent compound annual growth rate). On average, there is a car in every second household in the country.

However, official car dealers reported a decrease in the amount of sales of new cars by 28.2 percent in first quarter of 2017 compared to the same period of 2016. As much as 29 percent of all cars sold in 1Q2017 were assembled in Kazakhstan.

Uzbekistan vehicle market in 2015 boomed 25 percent due to the availability of GM Uzbekistan production for the sharp cut to export.

GM Uzbekistan, a joint venture between General Motors and Uzbek state firm UzAvtosanoat, has earlier begun selling all its cars in the Central Asian nation in local currency terms, but using an exchange rate far weaker than the official one.

GM Uzbekistan, which produces more than 200,000 cars a year, had previously sold only a few select models, mostly the most expensive ones for sums.