Mirziyoyev supports public anger over car price increase

Photo from UzNews.uz

Uzbek president Shavkat Mirziyoyev has criticised the decision by the management of the country’s automobile industry to increase the price of cars, qualifying it as inappropriate in the current conditions. The head of state made the comments at a meeting during a trip the Khorezm region, the presidential press office reports (in Russian).

On 9 March, UzAuto Motors published an updated price list, increasing the cost of a number of its models by 15-20%. The decision immediately provoked a flurry of public criticism. A campaign was launched on social media as part of which users were urged to boycott the company’s products. The Antimonopoly Committee of Uzbekistan then announced that an investigation into the economic justification for the price rise would need to be conducted.

“You have all seen how the decision by the leadership of our automobile industry to raise prices has provoked public dissatisfaction. Perhaps this is justified economically, but in the present conditions it is not appropriate. We should be making life easier for our people. Every decision should be thought over seven, seventeen times. Before all else, we need to raise our people’s purchasing power,” Mirziyoyev said.

In an interview with news website Gazeta.uz, Shavkat Umurzakov, chairman of UzAuto Motors’ parent company UzAutoSanoat argued that the price increase was necessary in order to avoid selling the cars at a loss. He said that if the company had simply wanted to increase profits then it would have raised prices not by between 3% and 20%, but by 40% or more.

Umurzakov blamed the devaluation of the Uzbek sum in September 2017 as the main factor behind increased production costs, saying that in dollar terms production costs had actually been lowered. In 2017 and 2018, he said, a number of models were being sold at a loss of 3-17% and the company accrued debts of more than $500 million, despite preferential treatment by the Uzbek state.

The car industry in Uzbekistan was founded in 1992 following the collapse of the Soviet Union, with the government (in the form of UzAutoSanoat) as the major shareholder, in partnership with first Daewoo and then (following its purchase of Daewoo in 2008) General Motors. At the end of 2018, UzAutoSanoat acquired the remainder of GM Uzbekistan’s shares and later renamed the enterprise UzAuto Motors. Owing to huge fees on imported vehicles under the regime of Islam Karimov, the single-enterprise car industry became a major industrial branch in the country. It fully controlled the domestic market – one of the first things visitors remark on when arriving in Uzbekistan is the uniformity of its cars, of the same two or three models and invariably white – and even exported abroad. Since 2017, President Mirziyoyev has embarked on a major campaign of economic liberalisation.