"Kazakhstan and Central Asia Autos Report 2011" now available at Fast Market Research

Nov. 18, 2010 - PRLog -- Core Forecasts - Kazakhstan: New passenger car sales in Kazakhstan fell to 17,878 units in 2009, from 27,085 units in 2008. This 34% plunge followed a near 20% fall during the previous year, from a peak sales level of 34,000 units in 2007. The poor performance in recent years reflects, in part, a downturn in economic growth, which declined from over 10% in 2006, to just 3.0% in 2008 and 1.2% in 2009. However, car sales have suffered particularly badly owing to the extreme vulnerability of consumer demand to changes in the economic cycle and the bursting of a credit bubble in the country's financial sector. Like many other nations around the world, the country's credit bubble emerged during the boom years earlier this decade and inflated to spectacular proportions, with banks paying little regard to consumers' ability to pay back loans. When the economic downturn kicked in and debtors began to experience difficulties in repaying funds, the fundamental weakness of banks' portfolios was exposed. As of July 2010, non-performing loans stood at 36.5% of total loans in Kazakhstan's banking sector; the need to make provisions for these loans and restore capital adequacy naturally severely constrained the system's ability to extend credit to consumers. As such, overall client loans expanded by just 4.5% y-o-y in May 2010, compared to 16% y-o-y in 2009 and 98% y-o-y during the height of the boom in May 2007.

Despite an expected export-driven rebound in overall economic growth in 2010, the poor health of the financial sector will constrain consumer demand and result in car sales retracing only some of the ground that was lost in 2009. We predict that passenger car sales will rise by 18% in 2010 to reach 21,100 units. Moreover, despite an expected continued recovery of Kazakhstan's broad economy during 2011 and beyond, it will take the banking sector some time to recover its ability to lend (and consumers some time to recover the confidence to borrow), to the extent that we forecast it will be 2014 before the 2007 'high watermark' for car sales is surpassed.

Core Forecasts - Uzbekistan: The country maintains a significant production base regarding vehicle assembly. However, as a result of the global economic downturn, output of passenger cars - which accounts for the vast bulk of vehicle output in the central Asian state - declined significantly last year. From a peak of just over 195,000 units in 2008, production of new passenger cars fell 43% to 110,200 units in 2009. Car demand in Uzbekistan and across the whole central Asia region took a big knock from the global economic downturn, as consumers retrenched and banks became much warier of providing credit.

However, after the hammer blow of late 2008 and 2009, we anticipate that output will recover over the coming years, thanks to two key factors. First, there will be a strong recovery in domestic sales. In the first nine months of 2010, domestic sales of passenger cars surged. General Motors Company (GM), which accounts for close to 97% of the domestic market for new passenger cars, saw a 58% y-o-y increase in sales across this period, to 111,663 units. As a result, we predict that local new passenger car sales for 2010 as a whole will total nearly 162,000 units, up from an estimated level of just above 97,000 units in 2009. The second key factor that should underpin local production is a renewed commitment on the part of GM to the central Asian state, in a context where the fortunes of the carmaker have undergone an American government-sponsored revival during recent months. Subsidiary GM and UzAvtoSanoat began production of a new small car, the Chevrolet Spark M300, at the Asaka plant in Uzbekistan in August 2010, with output of this model - the seventh GM model to be produced in the country - expected to run at 50,000 units per year. Production of this model should also support exports, at a time when car demand should recover not just in Uzbekistan, but also in Kazakhstan (albeit at a slower pace in the latter than the former).

Overall, we anticipate that passenger car production in Uzbekistan will rise by 60% in 2010, to 176,320 units, before surpassing the 2008 level in 2011, with a total production volume of over 210,000 that year (a rise of 20% y-o-y compared to 2010). During the remainder of our core forecast period, we anticipate that production of new passenger cars will rise by 10% each year, to reach nearly 310,000 units in 2015.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.