Uzbekistan: General Motors to Open Car Plant in Tashkent

General Motors Corp. is backing a move to expand the operations of an Uzbek auto venture in which it is a partner. The expansion is coming despite recent disastrous sales figures.

The venture, Uz-Daewoo, has announced it will in effect divide its operations. Currently, the automaker produces cars at the Asaka plant in the Ferghana Valley's Andijan province. Under the new production scheme, the assembly line for two models currently manufactured in Andijan will move to a site at the Chkalov Tashkent Aircraft Production Plant. The new plant is slated to produce about 15,000 cars per year and create about 1,200 new jobs, the UzReport.com website reported March 26.

The struggling US automaker holds a 25 percent share in Uz-Daewoo; Uzavtosanoat owns the other 75 percent. Uzbekistan's car market, both domestic and export, has been hit hard by sagging demand over the last year. Uzavtosanoat claims that more than 195,000 vehicles were manufactured in 2008, a 13.5 percent increase over output in 2007. Many of the cars produced last year went unsold, however.

In January, the Uzbek government extended a five-year tax break to domestic dealers, and in December 2008, Asia-Invest Bank, a subsidiary of the National Bank for Foreign Economic Activity of Uzbekistan in Russia, opened a $25 million credit line to Russian distributors of Uzbek vehicles to help maintain sales in 2009. However, Uzbek auto exports to Russia appear to be in freefall. Uz-Daewoo exported just 935 vehicles to Russian dealers in January, a massive 85 percent drop over the previous month's total.

In addition, some 15,000 unsold vehicles were returned to the Asaka car plant during the last quarter of 2008. The Asaka car plant employs more than 5,000 people.