Chinese Carmakers Expand Into Growing Central Asian Markets
Chinese automakers are pushing deeper into Central Asian markets through exports and manufacturing localization after Russia’s crackdown on a lucrative loophole that allowed re-exports of vehicles through Eurasian Economic Union (EAEU) member states.
Carmakers including Chery Automobile Co. Ltd., Chongqing Changan Automobile Co. Ltd. (000625.SZ +0.08%), Anhui Jianghuai Automobile Group Corp. Ltd. (JAC) (600418.SH -2.14%) and Great Wall Motor Co. Ltd. have built a presence in the Kazakhstani market, which has developed a major taste for Chinese vehicles.
Last year, China-made cars accounted for 39% of the 205,111 vehicles sold in Kazakhstan, the region’s largest economy. That’s up from 10% in 2021, according to a recent report by Kazinform News Agency. Market observers attributed the growing popularity of Chinese car brands to their lower prices, product diversification and promotions by local dealerships, the report said.
The auto trade between Central Asia and China is primarily over land, via Northwest China’s Xinjiang Uyghur autonomous region. In 2024, automakers in China shipped 124,234 vehicles to Kazakhstan, a 25.2% increase year-on-year, while exports to Kyrgyzstan jumped 27.5% to 97,078, according to data provided by Cui Dongshu, secretary general of the China Passenger Car Association (CPCA). Both countries border Xinjiang.
The growth in exports follows Moscow’s closure of an auto trade loophole that many Chinese middlemen had exploited to avoid customs duties.
In April last year, Russia began imposing new levies for cars imported from EAEU countries, effectively closing the so-called “grey import” channel that had allowed re-exports of China-made vehicle via lower-tariff EAEU member states.
The EAEU, made up of Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia, is an economic bloc where member states can trade freely with each other without tariffs, non-tariff barriers and other internal customs controls.
As Central Asia emerges as a lucrative long-term market, more Chinese automakers with clear overseas expansion plans are expected to establish a local presence. Going forward, they are likely to limit car sales to middlemen who lack after-sales maintenance services, as this can harm their brand image abroad, analysts said.
Localizing manufacturing
Chery, Great Wall Motor and JAC are the best-performing Chinese car brands in Kazakhstan, with Chery’s Tiggo 2 SUV, Great Wall’s Haval M6 SUV and JAC’s J7 sedan making onto the list of the country’s 10 most popular models priced below 10 million tenges ($19,860) for the first time in 2024.
Chery, Great Wall Motor and Chongqing Changan are in the process of setting up a local manufacturing facility with Astana Motors, which is building a plant in the country’s largest city Almaty to produce Chery, Changan and Haval brand vehicles. The deal was signed in 2022, and production is expected to begin this year.
In 2019, JAC joined state-owned China National Machinery Import & Export Corp. to acquire a 51% stake in Kazakhstani auto manufacturer and distributor Allur Group, extending a partnership forged in 2014, when JAC and Allur began working together to build JAC-branded cars locally for the Kazakhstani market and export to neighboring countries.
Meanwhile, Chinese electric vehicle giant BYD Co. Ltd. has set its sights on the Uzbekistan market, setting up a factory in the local city of Jizzakh. The site began mass producing BYD vehicles in June 2024 and has the capacity to produce 50,000 cars annually in its first phase of development. Under a late 2022 deal with local giant UzAuto, the factory is BYD’s first overseas jointly owned facility for manufacturing new-energy vehicles.
Exports of China-made cars to Uzbekistan totaled 89,584 last year, down from 117,410 in 2023 but nearly triple the 32,887 shipped in 2022.
Contact reporter Ding Yi (yiding@caixin.com) and editor Jonathan Breen (jonathanbreen@caixin.com)
caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Global Neighbours is authorized to reprint this article.
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