UzAuto: Profitable production in market conditions
It is well known that throughout most of Uzbekistan's modern history, the national economy has been supported by strong protectionist measures in order to attract investment. But in recent years, the state has embarked on a systematic reduction in privileges and preferences to create a level playing field for business and greater transparency. These changes have also affected the activities of the automotive industry.
As a result of the abolition of tax exemptions, including VAT, UzAuto Motors JSC has become one of the top ten taxpayers in Uzbekistan since 2021, with deductions amounting to 5.6% of the industry's share of GDP. In the past five years, despite the pandemic conditions and the geopolitical situation in the world, the total tax payments of UzAuto, which includes UzAuto Motors JSC and over 80 other companies, amounted to over 22.1 trillion sums.
Currently ,the enterprises of JSC Uzavtosanoat pay taxes, including VAT, on a par with all private enterprises in Uzbekistan. Increased competition and a new management approach are paying off. As of 2018, due to aggressive reforms in both production and management, the company was able to reach a profit of 1.7 trillion sums at the time.
Undoubtedly, the company's financial recovery has had a positive impact on UzAuto's image in the international arena. In 2021, UzAuto Motors issued international Eurobonds worth 300 million dollars on the London Stock Exchange, and earlier this year the company carried out the country's largest initial public offering (IPO). By becoming a full-fledged participant in the international capital market, the company has channeled funds into modernising production and introducing technologies new to Uzbekistan without the involvement of government funds.
Renewal of the vehicles produced, improvement of production quality and transition to high international quality standards BIQ-IV have created favourable conditions for the creation of an automotive conglomerate between Uzbekistan, Kazakhstan and Azerbaijan. In March 2020, UzAuto Motors launched production of new models under the "Chevrolet" brand in Kostanai (Kazakhstan), where they became the most popular cars among customers from the first year. A year later, in September 2021, a production line also opened in Hajigabul (Azerbaijan).
The industry's export potential over the past five years has allowed for an almost nine-fold increase in foreign exchange inflow into the country from exports of value-added goods, reaching an annual volume of nearly $554 million in 2022, up from $58.7 million in 2018.
It is clear that mechanical engineering, as one of the most important industries in the world that reflects the evolution of science and technology, is at the forefront of industrialised countries. Metallurgy, oil and gas, chemicals, electrical engineering and other industries lead one of the most multiplicative industries, with 1 job creating 7 jobs in related industries. An industry of the most advanced technology, which will give an opportunity to become a leader among countries with high engineering potential, to create and expand its capabilities in science and production.