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Ukraine Gives Red Light to Cars from Uzbekistan

Saturday 29 October 2011

(Uznews.net) – On November 15 Ukraine will introduce import restrictions on cars made in Uzbekistan. The new limit of three cars per year will be enforced for three years.

The Ukrainian authorities introduced the new regulation in response to “discriminatory actions on the part of Uzbekistan”, according to NewsMax.com.ua.

The pretext for the strict quota on vehicles produced by GM Uzbekistan was Uzbekistan’s decision to increase excise duties on goods coming into the country. The new duty rates will increase the cost of cars imported from Ukraine into Uzbekistan by at least 150% and will make them uncompetitive on Uzbek markets.

In Ukraine, their newly imposed excise tax on new small cars will apply to producers as well as exporters. The car manufacturers association Ukravtoprom believes that exchange rate regulations in Uzbekistan are designed to give its domestic car producers a competitive advantage and to block the imports of competing goods from abroad.

Ukraine’s refusal to buy the Uzbek Nexia and Matiz cars is not expected to have a huge impact on the profits of its producer, the Uzbek-US joint venture General Motors Uzbekistan. However, the decision by Ukraine’s Cabinet of Ministers could create a problematic precedent for Uzbek car producers.

If Ukraine’s decision is copied by the other main imports of GM Uzbekistan cars – Russia, Kazakhstan, Belarus, Azerbaijan and Turkmenistan, then the company’s export sales will be reduced to zero.

It is doubtful that this could happen in the near term, however. According to Uzavtoprom figures, in the first nine months of 2011, GM Uzbekistan increased its sales to Russia by 31%.

Nevertheless, if other importers of small cars do follow Ukraine’s example, it is hard to predict how this will affect buyers on the domestic market. In seems likely that Uzavtoprom would hike car prices again. The last time Uzbek car producers increased their domestic prices was on 24 March 2011, with hikes of between 7% and 20% depending on make and model.

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