Major Project 2006-2008
Location – Uzbekistan
Project Value $52million

As a result of my work in Iran with IKCO, I was approached  to look at helping the Uzbek car industry. This country is quite poor and their car industry produces about 10% of their GDP. The problem they had was that they did not have any direction.

Some 12 years ago they started car production in a JV with Daewoo of Korea, in Andijan Province, in Asaka City. Everything started off ok and they produced the Daewoo Nexia and Matiz. Some years later, Daewoo Motors went bust and the Uzbek’s were left stranded. They were able to eventually get supplies of parts from the new owners of Daewoo Korea who were GM. The position with ownership was in the meantime difficult because the Receivers of Daewoo Motors still held 50% of the shares. At this time they were exporting around 50,000 units of Nexia per year to Russia and sales were showing the first signs of declining and it was into this arena, which the Prime Minister Mr Sultanov invited me over for discussion. We put together a plan to solve these issues and we were awarded a contract to deliver it.

Firstly we looked at the old Nexia model and determined a facelift project which could be afforded and which would enhance the vehicles life for another 3 to 4 years until the Uzbeks could attract an international OEM as a partner. Their total industry volume is such that they do not have the economics to justify a standalone facility.

We fast tracked this project and went into production within 18 months. This vehicle had a new interior and bumpers and lights, and we were able to bring in some Korean and Indian supplies into JV’s there to create some more jobs as part of the project. This project was small, so we only created about 600 new jobs.

Secondly, I helped in negotiations with the Receivers’ of Daewoo Motors in Korea and eventually got an agreement for the Uzbek Government to pay $20million for the remaining 50% shareholding. This meant that they were completely in control of their own destiny now. My next step was to look at the strategic importance of Uzbekistan in relation to its key export market of Russia. As is the case with other CIS countries, products can go into Russia with no import duty, but in Uzbekistan, because they own the car company, there is no import duties. This therefore meant that if an OEM wanted to exploit the Russian Market, it could set up in Uzbekistan in Partnership with the Government and could improve its margins. Having developed this scenario with Mr Sultanov, we approached a number of OEM’s to find a partner. There were lots of discussions and the main contenders were Hyundai and GMDAT both of Korea. GMDAT was the supplier of kits to Uzbekistan and did not want to lose their volumes, so we used Hyundai to get GM to increase their investment. The result was that GMDAT invested $40million in exchange for 25% of the shares and the company has been renamed GM-Uz. GMDAT have the option to increase their shareholding to 75% in steps over 5 years.

In 2008 Uzbekistan exported some 120,000 vehicles to Russia