BAKU, Azerbaijan, Feb.25
By Natavan Rzayeva - Trend:
According to the S&P Global Ratings Uzbek UzAuto Motors JSC faced only a limited threat to its competitive position from the recently announced reduction in Uzbekistan’s custom duties on imported new cars,Trend reports via S&P's statement.
The cut to 15 percent from 30 percent will improve the affordability of imported cars in Uzbekistan. However, UzAuto Motors' pricing for its key models remains 20-40 percent lower than comparable import vehicles, amid broad localization and cost optimization following the General Motors Global Emerging Markets (GEM) platform launch.
Therefore, S&P forecast limited pressure on its near-term pricing, sales, and competitive position. That said, UzAuto Motors' pricing advantage could diminish if further broad-based reductions in import taxes and levies in the medium term.
The government of Uzbekistan also revised the minimum prepayment requirement for new car orders to 50 percent from 85 percent. S&P see little downside risk to the credit metrics from this move, since it is already captured in the base-case working capital outflow of $200 million-$250 million in 2022.
Uzbekistan's gradual liberalization of the auto industry does not change S&P's assessment of UzAuto Motors' relationship with the government.
This is because S&P believe the industry is a key pillar in helping diversify the economy away from natural resources, and UzAuto Motors remains a pivotal asset with its GEM platform project realization.