Uzbekistan automotive market: trends and challenges

Uzbekistan’s automotive market has been steadily growing in recent years, driven by improving economic conditions, the expansion of local production, and rising consumer demand.

As of January 1, 2024, there are over 4 million vehicles owned by individuals in the country, of which 3.8 million are passenger cars. The year 2023 set a record for new car sales – 456,300 units sold, up by 33% compared to 2022. Of these, 380,000 vehicles (or 84%) were made in Uzbekistan, highlighting the dominant position of UzAuto in the domestic market.

Car imports are also on the rise – from 30,000 in 2022 to 74,500 in 2024. A growing dealer network and easier access to auto loans (which surged by 87% to reach $3.1 billion) have fueled demand, especially from individuals, who own around 90% of all cars in the country.

But despite this positive momentum, the market remains unbalanced. The dominance of one domestic producer, limited access to international brands, high taxes and customs fees, as well as challenges with fuel quality and environmental standards, all restrict healthy competition.

Key Challenges in the Sector

1.⁠ ⁠High taxes and import duties on foreign cars

Importing a vehicle into Uzbekistan comes with significant fiscal costs:

• ⁠ ⁠Customs duties: up to 20% of the car’s value + $3 per engine cm³
• ⁠ ⁠Recycling fee: up to $13,900 for combustion engine cars over 3.5L
• ⁠ ⁠VAT: 12% on the total (including transport and recycling costs)

These barriers effectively protect local manufacturers but limit competition and consumer choice – especially in the premium segment. Only a few official dealerships (like Mercedes, BMW, and Porsche) operate, while many other brands face high entry costs.

2.⁠ ⁠Certification bottlenecks

New certification rules for imported cars came into force in November 2024. However, there’s only one certification lab in Pskent, with a capacity of just 18,000 vehicles per year – far below the 74,500 cars imported in 2024. This causes delays, adds transport and storage costs, and increases testing fees (up to $703), pushing up overall car prices.

3.⁠ ⁠Stricter environmental standards

A new “Eco Transport” program launched in 2024 introduces phased restrictions based on vehicle emissions. While this is in line with global sustainability efforts, it could limit the import of older, more affordable vehicles – reducing access for lower-income buyers.

4.⁠ ⁠Increasing pressure from the national automaker

UzAuto is expanding into the premium market by importing models like the Chevrolet Tahoe and Equinox. Backed by state support and a well-developed dealership network, it enjoys a strong position – while foreign brands continue to face certification and tax hurdles.

5.⁠ ⁠Poor fuel quality

Over 80% of Uzbekistan’s vehicles use AI-80 gasoline, which is often criticized for low quality. In 2023, more than 9 million liters of counterfeit fuel were discovered. Limited availability of higher-grade fuel (AI-95) and European-standard diesel makes it difficult to run modern cars – especially premium models and electric vehicles.

Emerging Trends and Opportunities

1.⁠ ⁠Growth in electric vehicles (EVs) and the “BYD Effect”

Interest in EVs is surging – by 2024, electric vehicles accounted for 7% of car deliveries. This growth is largely due to tax exemptions and successful marketing by brands like BYD. BYD’s success came from using Islamic finance options and selling online through the alifshop.uz marketplace – making EVs more accessible to everyday consumers.

2.⁠ ⁠Auto loan boom

Affordable financing has become a major growth driver. In 2023, total auto loans reached $3.1 billion – nearly double the previous year.

Recommendations for Sustainable Market Development

For Government Authorities:

1.⁠ ⁠Reform customs and recycling fees, especially for eco-friendly vehicles – to foster competition, lower prices, and improve affordability.

2.⁠ ⁠Expand certification infrastructure by building more regional labs to reduce delays and costs.

3.⁠ ⁠Improve fuel quality through investments in refinery modernization.

4.⁠ ⁠Ensure fairness in the “Eco Transport” program – protect vulnerable groups by offering subsidies, EV incentives, or affordable public transport alternatives.

For Dealers and International Brands:

1.⁠ ⁠Embrace online sales and Islamic financing models – the BYD + alifshop approach proved successful and can be adapted by other brands.

2.⁠ ⁠Invest in EV and hybrid infrastructure to serve the growing demand.

3.⁠ ⁠Develop logistics hubs and multi-brand service centers- to cut down on maintenance costs and improve after-sales support.