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Kazakhstan to introduce privileges for purchase of domestically produced cars

18 March 2015 18:27 (UTC+04:00)
Kazakhstan to introduce privileges for purchase of domestically produced cars

By Sara Rajabova

The Kazakh government is carrying out a number of measures to promote the development of its auto industry, which was significantly impacted by neighboring Russia's economic slump.

Kazakhstan will introduce privileges for the purchase of domestically produced cars starting from April.

The people will be able to buy cars at reduced interest rates - four percent, and below six percent leasing for legal entities, Almaty TV channel reported.

But these benefits will be applied only to vehicles produced in Kazakhstan. In order to support the domestic auto industry, the government allocated 20 billion tenge ($108 million), 15 of which are intended for individuals.

The nominal rate for car purchase also includes insurance payments. Though the concessional loans will be available in April, banks operators have not yet approved the changes.

Kazakhstan’s auto market first experienced difficulties when its economy began to slow down as a result of Russia's troubles. As a direct result of the economic downturn, some Kazakhs rushed to the Russian automotive market in order to buy suddenly depreciated cars, thus negatively impacting the automotive industry in Kazakhstan.

Kazakh car dealers suffered great losses from such a developments and many had to lower their prices by 20-30 percent in order to save their business from collapse.

“It's a good idea to support the country’s car industry. In this regard, it is necessary when we are experiencing difficulties in pricing compared to our northern neighbor Russia. The cars official dealers in Russia are cheaper than Kazakhstan,” said Paul Kim, the chairman of the Union of Independent Business Auto Kazakhstan.

The volume of passenger cars in the country last year exceeded 37,000 units, including 2.5 thousand commercial vehicles, according to the Association of Kazakhstan Auto Business.

Vehicle sales in Kazakhstan’s domestic market were decreased by almost half, mainly due to the increase in imports of cars from neighboring countries, in particular from Russia. Thus, since the beginning of this year 50 thousand cars were exported from Russia. This is higher than the domestic production by almost 20 percent. At the same time, the average cost of a car from a domestic plant stands at 10 thousand dollars.

“It is necessary to take into account that even with a low tariff percentage prices will still be higher than in Russia. The consumer primarily examines this question today, how much it costs in Russia and how much in our country,” said Maksat Mirmanov, the director of automobile holding.

Large and unchanged importers of car over the past few years were Russia, Japan and Uzbekistan.

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Sara Rajabova is AzerNews’ staff journalist, follow her on Twitter: @SaraRajabova

Follow us on Twitter @AzerNewsAz

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