Agromash Holding, the division of the Allur Group that assembles vehicles including Iveco, UAZ and Ssangyong in the northern Kazakh city of Kostanay, began installing batteries this year on Iveco vehicles that were produced by manufacturers from the Taldykorgan Oblast, in the southeast part of the country, according to a company report. Also this year, the manufacturer began using a variety of liquids and oil products of Kazakh origin that had previously been imported.
“These measures allow us to increase the localisation of Iveco vehicles by 3-5%,” commented a spokesperson from the press service of the Allur Group. “About 1-2% is added to the localisation of energy, including heat, electricity, gas and waste management. Thus, the total percentage of local [Kazakh] content in Iveco vehicles now amounts to about 20%.”
Agromash announced that it intends to accelerate the localisation of Iveco vehicles so as to improve logistics, and to further develop the supply base in Kazakhstan, including the manufacture of components such as glass, batteries, tyres and plastic parts. The company also said that it hoped localisation would help to increase the number of qualified professionals in Kazakhstan, as the Allur Group currently suffers from a shortage of skilled labour.
“The next step towards increasing the local content in Iveco vehicles will be the transition from SKD assembly to completely-knocked down (CKD) assembly, which includes welding and painting of the body, and will lead to the higher level use of domestic components,” said the spokesperson.
However, CKD assembly requires more personnel, a stronger supply base and a higher level of staff qualifications, which makes the timetable for such a transition in Kazakhstan uncertain.
The Kazahkstan automotive industry grew strongly in 2012, as volumes more than doubled to surpass 98,000 units. The market is currently dominated by Lada, which controls about 40% of the market, but global carmakers such as Toyota have been growing here. In March, PSA Peugeot Citroën announced that it would enter the market and that Agromash would begin assembling vehicles in June this year. The company will start assembling Toyota vehicles in 2014.
The country also benefits from being part of a customs union with Russia and Belarus, which includes preferential customs and duty access to member states. Currently, vehicles built in Kazakhstan or Belarus are also exempt from Russia’s recycling charge for new vehicle imports, although Russia is seeking to apply the charge beginning in July this year.
