The president of Kyrgyzstan oversaw a ceremony on February 28 to lay the foundations of a vehicle factory that his office says will eventually produce up to 80,000 units annually.

The $115 million project is being implemented jointly by Kyrgyz companies and China’s Hubei Zhuoyue Group, President Sadyr Japarov’s office said in a statement.

Operations are scheduled to begin in August.

Japarov’s office said the plant, which is located in Sokuluk, just west of Bishkek, will assemble electric vehicles, and commercial and passenger vehicles, but it provided no insight as to which brands would be produced there.

The president noted in his speech, however, that he believes this project will serve as a cornerstone for the “Made in Kyrgyzstan” brand.

Kyrgyzstan’s main engagement with the auto business over the past year has been to serve as a re-export hub.

The National Statistics Committee reported earlier this month that more than 79,000 vehicles were imported from China in 2023 — a 44-fold increase on the year before.

Most of those cars are ending up in Russia. Car market analytics company Avtostat revealed in December that Kyrgyzstan had since the start of 2023 exported 60,000 cars to Russia.

Also in 2023, Kyrgyzstan imported some 50,400 cars from South Korea, up from around 10,600 in 2022.

The Sokuluk plant is just one of two auto ventures that are meant to open their doors in Kyrgyzstan this year.

In May 2023, work began on building a car assembly plant in the village of Ak-Suu in Kyrgyzstan’s northern Chui region. The factory will be operated as a joint venture between Uzbek government-controlled UzAvtosanoat, or UzAuto, which manufactures vehicles under the Chevrolet brands, and Kyrgyz company DT Tekhnik.

During its initial phase of operations, the Ak-Suu facility will have a capacity for producing 10,000 vehicles per year, Kyrgyz officials said.

UzAuto executives have indicated that the Kyrgyz plant will initially assemble cars from large pre-made sections or modules. UzAuto factories in Uzbekistan already manufacture those components and will likely serve as the primary source for assembly kits.

With Russia looking to clamp down on the current Kyrgyz auto re-export model, the Uzbek-Kyrgyz tie-up may offer an appealing alternative.

While Kyrgyzstan is a fellow member in the Eurasian Economic Union, or EAEU, trading bloc with Russia, Uzbekistan is not and its exports are not as a consequence covered by tariff-free privileges. By exporting components to Kyrgyzstan, however, UzAuto can avoid the full pain of the EAEU trade barrier as tariffs for parts are lower than for fully assembled vehicles.