Impact of Custom Union to Kazakhstan

I want to start my Tethys from the history of Kazakhstan’s car market, what are the prospects for the future and how it is influenced by the customs union. Before the financial crisis Kazakhstan’s car market demonstrated impressive growth, more than 25% annually, which is higher than in most developed countries.

Used car market also was developed because it was cheap to buy a car abroad with a little customs tariffs in our country. So most of people preferred to have a used foreign car rather than a new car produced in Kazakhstan , it is might be because of quality of own produced cars and there are not so many choices. But after the crisis the car market rapidly declined approximately 30-40 %. The biggest factor of the recession, is a significant rise in the cost of loans by Kazakhstan banks and tightening requirements for borrowers.

Used car market also showed the downturn. Until 2008, every second car buyer used the bank loan. Today to get the loan for purchasing a car can only one of the 20 buyers. Nowadays Kazakhstan’s car market have 11 companies which officially sell about 40 foreign car brands. In addition to global brands we have the biggest Russian company “AvtoVaz”. Also we have own car plant in Ust Kamenogorsk which produces a car brands like AvtoVaz, Chevrolet, SsangYong, Chance, IVECO and Skoda for up to 45000 cars per year.

Although until recently, the phrase “Kazakhstan’s car” sounded like nonsense. In July 2011 Kazakhstan fully joined to customs union with Belarus and Russia. In that time the public and the media met this statement negatively, arguing the right to freedom of choice of products because customs tariffs for cars increased up to 30% and plus 12% VAT, so it means that it is disadvantageously to buy a new or used car abroad in order to save money they are used to do in past like in 2007.

But some said that in order to develop our production, it is necessary to protect market from third country imports. Also car dealers also agree that it will increase demand for officially new cars, as Vadim Artamonov says, Director, Rolf Import Kazakhstan «In general, as for the market, a milestone event occurred last year. Preferential import duties on cars have been canceled for the first time since last July and Kazakhstan fully joined the Customs Union. Accordingly, this enabled the market to grow significantly.

Now the market growth stands at about 30% annually. ». In 2011, the amount of vehicles sold by official dealers in Kazakhstan increased by 49. 6% as compared to 2010. I think and aware that joining to customs union will affect positively and will give more advantages for our car producers, and we will develop own car industry like for example in Malaysia, Thailand and Brazil. For example initially in Malaysia cars produced from imported parts, but gradually is localized production.

Now their own car marked developed well and besides the domestic market the company’s products are exported to UK and some European countries, they have brand like Proton, it’s Malaysia’s biggest automaker, is specialized in the production of vehicles under license from Mitsubishi. So we can do the same things, today one of fifth cars sold in the country – Kazakhstan’s production. But the potential of the domestic consumer market of these products is much higher. Also we can deliver our products to the Russian and Belarusian automotive markets.

And I want to say that that it is not just developing car market in Kazakhstan, it’s also developing our economic as whole because it is imply a new jobs for our citizens means less unemployment, we invest our money in our country, not investing another countries as previously. I think we have to support and buy own produced cars instead of buying used foreign cars, and we should make a contribution on that in order to develop our production. Another thing also I want to mention is that our dealers are ready to provide loans for their cars on affordable terms and it would be good opportunity for customers.

Because it is a new car and it has a guarantee from 3 to 5 years. According to experts, in an environment where the cost of imported second-hand cars increases so that they cease to be available to the masses, and new import cars get very luxury for our customers, so optimal combination of price and quality would be own produced cars.