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GM Uzbekistan streamlines its supply chain

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GM-UzbekistanGM’s joint venture with the government of Uzbekistan – GM Uzbekistan –  is expected to make 220,000 vehicles this year, a 37% increase compared to 2017.

The OEM has more than halved the delivery time of Cobalt and Malibu  vehicles – the two most popular models in the domestic market, the carmaker said in a statement. The delivery time for Cobalt has been reduced from 60 to 25 working days, and Malibu Turbo cars from 90 to 45 working days, due to the ongoing demand for the vehicles in Uzbekistan.

Domestic customers were discouraged by the delivery time for finished vehicles, Uzavtosanoat, the parent company for GM Uzbekistan said in August. In response, the OEM revised its production and sales strategy, re-built the supply schemes and took measures aimed to increase the automotive components delivery to the assembly plant, Uzavtosanoat said.

The company then managed to supply 42% of finished vehicles under contract with domestic customers ahead of schedule, Uzavtosanoat added.

GM Uzbekistan sold 76,000 finished vehicles in the first half of 2018. In the second half of the year, the figure is expected to be noticeably higher, Shavkat Umurzakov, general director of Uzavtosanoat outlined, speaking at a press-conference late September.

After reducing the delivery time, the carmaker was selling 3,300 finished vehicles per day on the domestic market in September, compared to only 500 finished vehicles on average per day in the first half of the year, Umurzakov announced. As a result, the Asaka assembly plant – the GM Uzbekistan’s main production unit – reached full occupancy for the first time ever.

The plant is now running for 22 hours per day, compared to only nine to 11 hours per day last year, Umurzakov said.

The hike in sales in September, however, to some extent may be associated with the deferred demand effect as GM Uzbekistan had to stop finished vehicles sales for several weeks in August due to price uncertainty.

In addition, GM Uzbekistan took steps aimed at combatting fraud within the supply chain. In September 2018, the carmaker dissolved more than 10,000 contracts in finished vehicle purchasing and also terminated contracts with several dealerships.

These steps were taken because of ‘the corruption practices’. The contracts were with non-existent clients, and their existence was slowing down the finished vehicle delivery to actual customers, creating ‘a non-natural shortage in the market’, the company said in a statement.

Some dealerships were storing the most popular models in ‘closed warehouses’, charging extra payments for their fast delivery to clients, GM Uzbekistan admitted.

The OEM promised to continue combating fraud within its supply chain, paying close attention to dealerships.