Foreign Policy Blogs

Uzbekistan: Beep beep! New auto investment

Yes, trade can drive on in where pastors fear to tread:

The GM-Daewoo DamasEdmund's, a trade group following the auto industry, reports that auto manufacturer GM-Daewoo has bought into the UZ-Daewoo plant in Asaka, a city in the Andijan region of Uzbekistan.  The article continues with a fine and high disregard for previous asset expropriation of foreign business, including DaeWoo business: Daewoo (home state: Republic of Korea) opened the plant in the mid-1990's.  Their auto division collapsed with indebtedness during the Asian Financial Crisis.

According to the Central Asia-Caucasus Analyst, GM-Daewoo has been supplying the Asaka plant with the "kits" required to make cars even after Daewoo's collapse.  (If you are interested, these are Chevrolet-type cars).  But in October of 2006, Hyundai expressed interest in buying into the Asaka plant.  Apparently GM-Daewoo beat Hyundai out for the new expansion into CIS markets.

Edmunds says:

[The Uzdaewoo plant] has a capacity of 200,000 cars a year and built 140,000 in 2006. Its lineup consists of such evergreens as the Matiz minicar, the Nexia sedan and the largely unknown Damas minibus. Last year, the Uzbek government took full control of the plant.
According to the new agreement, GM will help train plant workers to modernize production. Also, the Nexia will be modernized this year both inside and out, plus its engine will be modified to meet Euro 3 regulations. The eventual plan is for modern replacement models to be introduced.
What this means to you: GM has found a region where it can get past Toyota and appears to be running with it.

The Cash fliesWhat this means to me: no one, but no one, can accuse big business of pessimism, or even conservatism, if you think about it.  Has there been any recourse to Uzbekistan's asset expropriation in the fifteen-year record?  Maybe I misunderstand the transition between Daewoo's collapse and GM-Daewoo's purchase.  Or perhaps these business leaders have some new, improved safety net I don't know about.  My next question is: does the U.S. domestic market get to purchase automobiles that meet Euro-3 standards?  Just asking. 

If any auto industry analyst reading here would like to clarify the arrangements available in Uzbekistan, just give us a honk in the comments.  In the meantime, I remain amazed at the courage  and persistence of the business community at large.

Further reading for Automobile enthusiasts:
Wikipedia on GM-Daewoo
Wikipedia stub on UzDaewooAvto
And for those potential investors in Uzbekistan:
U.S. Department of State February, 2007 Investment Climate Report-Uzbekistan

Photos:; Beneplan