Everyone in this country drives a Chevy. Here is why | #57
Can you guess a country where General Motors (GM), the auto giant behind Chevrolet, Buick, GMC, & Cadillac has the largest market share? No, it’s not the United States, Canada, or Brazil. It’s Uzbekistan. Yes, in this Central Asian country, GM’s Chevrolet cars dominate the streets. As soon as you land in Uzbekistan’s capital city Tashkent, you can’t help but notice white Chevys everywhere. Chevy has such a strong foothold in this country that 94% of cars sold in 2022 were all Chevys. How did GM end up in this position and why do most people choose a Chevy car in Uzbekistan? Let’s dive in.
A policy of self-reliance
After gaining its independence from the Soviet Union in 1991, Uzbekistan pursued a path of self-reliance to reduce its dependence on other countries and develop its economy. One of the core components of Uzbekistan’s self-reliance policy was to boost its economy by producing and manufacturing goods domestically rather than relying on imports. The government heavily invested in agriculture, mining, and manufacturing to develop these industries.
As part of this policy, Uzbekistan sought ways to boost its domestic auto industry. The government introduced tax cuts, provided land, and supported the construction of manufacturing infrastructure as a way to incentivize automakers to invest in the country. This is how in 1992 South Korean automaker Daewoo Motors entered Uzbekistan as part of a joint venture deal. This joint venture would go on to build the largest auto manufacturing plant in Central Asia and produce close to a million cars over the next decade.
Daewoo goes down and GM enters Uzbekistan
If you’ve never heard of Daewoo Motors, that’s because this brand ceased to exist about 20 years ago. Founded in 1967 in South Korea, Daewoo was known for its compact, affordable, and practical cars for everyday use. Starting in the 1990s the company started rapidly expanding internationally by acquiring smaller automakers or forming joint stock companies, like in Uzbekistan. While some of its international expansion plans were successful, others failed to materialize into profitable ventures. After facing financial difficulties for several years, the company went bankrupt in the early 2000s. This is when General Motors stepped in and acquired Daewoo’s assets and manufacturing plants.
In 2008, General Motors and the government of Uzbekistan joined forces to form GM Uzbekistan and mass-produce Chevrolet-branded cars for the local market and Ravon-branded cars to export to nearby countries. General Motors held a 25% stake in GM Uzbekistan while the government held a 75% ownership stake.
You can pick any car brand you want, as long as its a Chevy
Manufacturing hundreds of thousands of cars in a year is one thing. Accounting for 94% of all cars sold in the country is another. This is where our previous two points converge.
GM had a powerful ally in the government of Uzbekistan which held a 75% stake in the joint organization. The government wanted people to buy locally produced cars vs the ones imported from abroad. Instead of just incentivizing people to buy locally, the government decided to invert the problem and make it hard to buy imported cars. Every imported car was slapped with a 30% tariff on the value of the car and charged $3 for each cubic centimeter of engine volume.
On top of all these charges, importing to Uzbekistan is difficult because of its geography. Uzbekistan is not only landlocked but it’s double-landlocked which means that it neighbors landlocked countries. Being two countries away from major sea ports makes it costly to import goods into the country.
The myriad of costs associated with importing and expensive tariffs added 100-150% to the original price of the car. A small sedan that set you up for $15k in the US would cost $30-40k in Uzbekistan. At the same time, a locally produced Chevy sedan would cost $8-12k and was the only available option in the market.
Henry Ford, the founder of Ford Motor Company famously said that customers can ‘have their car painted any color they want, as long as it is black’. The people of Uzbekistan were in the same position - they could pick any car brand they wanted, as long as it was a Chevy.
Every year, 300k Chevy cars are manufactured and sold in Uzbekistan, making it the 3rd largest Chevrolet market in the world after the US and Brazil.
The doors are opening
The times are changing in Uzbekistan. Uzbekistan is now more open to the outside world - both in terms of tourism and trade. The government cut the car import tariffs by 50% and made it tariff-free to import Electric Vehicles (EVs) and trucks.
I just spent a week in Uzbekistan and saw a variety of cars ranging from Audi and BMW to KIA and BYD. The last two, KIA and BYD, are heavily investing in the market and opening up manufacturing facilities in Uzbekistan to produce up to 100k cars per year.
Maybe in a few years the streets of Tashkent will be different, but for now, it seems like everyone in Uzbekistan drives a Chevy.
If you liked this essay, please share it with friends on Twitter, Linkedin, or any social media.