Kazakhstan: Auto Industry Creaking Under Weight of Crisis
As Kazakhstan’s economic muddle continues apace, the production and sale of new automobiles has collapsed, while more drivers are choosing to buy or keep old clangers.
Figures released last week by the National Economy Ministry show that in the first quarter of 2016, the production of cars fell by 92.2 percent compared with the same period last year, Trend news agency reported. During the same period, factories in Kazakhstan produced 14.2 percent fewer trucks.
Kazakhstan’s main auto assembly companies — Azia Avto, Saryarka AvtoProm and Agromash Holding — turn out some of the world’s largest brands, including Chevrolet, Kia, Skoda, Lada, Toyota, Hyundai, SsangYong and Peugeot.
Most cars sold in Kazakhstan are imported, and demand has been steadily falling.
In 2015, official dealerships reported the sale of 97,446 automobiles, a 40 percent drop on the year before.
The rate of the drop-off in sales is intensifying. Figures from the Kazakhstan Automobile Business Association (KABA) show that 6,991 cars were bought from official dealerships in the first two months of this year, a 59 percent decrease on the same period in 2015.
A glance around the roads in Kazakhstan’s wealthiest cities, Astana and Almaty, is an easy reminder that many Kazakhs prefer when they can to buy larger cars able to handle some of the country’s worst roads.
But as KABA president Andrey Lavrentyev has noted, the greatest demand registered last year was for compact models costing under 4.5 million tenge ($13,300).
The biggest seller among smaller models last year was the Hyundai Elantra (2,203 units), followed by the Skoda Rapid with 1,351 sales. In a far third place was the KIA Cerato with 883 units sold.
Among the most popular off-road models were the Lada 4X4 (2,180 units), the KIA Sportage (1,101 units) and Hyundai Tucson (696 units).
The collapse in purchasing power is primarily down to the inexorable slide of the national currency. The tenge lost 20 percent of its value in February 2014, which is when the drop in auto sales first began to be felt.
The abolition in 2015 of sales tax on automobiles imported from members of the Eurasian Economic Union appears to have had minimal impact. Russian automobiles became far more appealing for buyers in Kazakhstan, leading to a mass exodus to the Russian market.
Matters only got worse with the tenge spiraling collapse last summer.
Car dealerships in Kazakhstan are now primarily focused on the lower end of the market and squeezing their margins to keep their heads above water.
More car-owners are turning, however, to the used car market to save costs.
According to Trend news agency, the National Economy Ministry estimated that 106,500 cars were registered in the first two months of 2016 — 11.6 percent less than in the same period last year. Of those cars, more than 64,000 were at least 10 years old, an increase from the 42,000 cars of similar vintage registered over the same period in 2015.
Authorities estimate there are around 5.76 million cars in Kazakhstan, although only 3.86 million of them are actually legally registered.