Toyota Signs Deals to Make SUVs in Kazakhstan

ASTANA – Kazakhstan has signed an agreement with Toyota Motors to make its first-ever SUV in the country.

On Feb. 12, the government and Toyota signed a Memorandum of Understanding (MoU) to launch Toyota’s Made in Kazakhstan project to manufacture Toyota’s Fortuner SUVs at the Saryarka Avtoprom automobile plant in Kostanay city. The factory will make up to 3,000 vehicles per year with an initial production run of 2,000 per year.

The same day, Prime Minister Serik Akhmetov met Toyota’s senior managing director and president and CEO of Toyota Motor Europe, Didier Leroy to discuss the project.

“This project is of high importance for us and is a good opportunity for promoting mutually beneficial cooperation,” Leroy told the prime minister. “We are confident that it will contribute to the development of the automotive industry in Kazakhstan and to the industrialization of the country.”

Akhmetov expressed optimism about the project’s prospects. “Kazakhstan is a member of the Customs Union and the sales market for auto companies is quite extensive,” he said. “The government will provide full support for this project and create all necessary conditions for the Toyota Motor Corporation to work beneficially in the country.”

Deputy Prime Minister and Minister of Industry and New Technologies Asset Issekeshev, Kazakhstan Automobile Association President and Allur Auto Director General Andrei Lavrentiev and Leroy then held a press conference on the SUV project.

“The production of Toyota cars will start in spring 2014. This project is a strategically important step towards the development of the automotive industry in Kazakhstan,” Minister Issekeshev said.

“The emergence of this company in the domestic auto market is very important for us,” he said. “Previously, we had considered various Toyota models, but finally the decision was taken in favor of the SUV.”

“The Toyota Fortuner SUV is a very reliable and practical car,” the minister said. “We hope that it will win a place in Kazakhstan’s automobile market and in the countries of the Commonwealth of Independent States. I believe it will become one of the key areas in the engineering industry of the country.”

“A thousand people will be employed at the Kostanay automobile complex to produce all kinds of cars and about 200 to 250 domestic engineers and workers will be employed in the Toyota – Made in Kazakhstan project,” he said.

Leroy said Toyota will be able to reach a new level of development and to attract more customers in Kazakhstan’s domestic auto market.

“The Toyota – Made in Kazakhstan project is an important milestone for the Toyota Motor Corporation and Kazakhstan,” he said. “It is the result of our fruitful cooperation with the government of Kazakhstan. We are starting production in this country because we are confident in the long-term potential of its market.”

“Since the start of sales, we have already sold over 20,000 Toyota and Lexus models since 2009, including almost 10,000 last year (in 2012). We firmly believe that the potential for the economic growth of Kazakhstan and the country’s automotive market is great,” the Toyota executive said. “When we start local production, we will be able to accelerate the industrialization of Kazakhstan, and I am convinced that Toyota will gain a new dimension in the market in order to attract more customers.”

“This project includes manufacturing operations for the welding and painting of cars, line painting and final assembly through the CKD (complete knock down) production process. The total investment in the project from the Kazakh side will amount to $35 million,” Allur Autos Director General Lavrentiev told the press conference.

Toyota Motor Kazakhstan President Shingo Kato said his company was “very pleased by the signing of the MoU enabling Kazakhstan to produce the Toyota Fortuner SUVs. I would like to express my heartfelt appreciation to the government and to all the other people who made it possible.”

“Once this made in Kazakhstan, true off-roader (SUV) begins coming off the line here, we will be able to offer an extended model line-up, including 10 imported Toyota models such as the Camry and the Land Cruiser, as well as seven Lexus models,” he said.

The Toyota Motor Corporation established the Toyota Motor Kazakhstan LLP as a sales and marketing company in May 2008 to import and sell Toyota- and Lexus-brand vehicles in Kazakhstan.

Toyota Motor Corporation, Sarayarka and the other companies involved in the SUV project will sign another agreement before the end of February on technical guidance and assistance, vehicle sales, knockdown production and the shipment of knockdown kit parts. The Toyota Tsusho Corporation will act as a carrier for SUV components.

“Kazakhstan is a very important market for the Toyota Tsusho Corporation,” TTC’s Kazakhstan director Takuya Ichihashi said. “This market will grow in the future.”

“In the field of industry and investment, we are working closely with the Kaznex Invest National Agency for Export and Investment of the Ministry of Industry and New Technologies,” Ichihashi said. “Our company plans to develop not only successful car sales in Kazakhstan, but also a number of other projects that will contribute to the development of the country’s economy in the fields of energy, agriculture, engineering and the production of consumer goods.”

TTC also signed a MoU to transport industrial components for the project, including spare parts, from Japan and Southeast Asia through China on Kazakhstan State Railways (Kazakhstan Temir Zholy). This programme is also designed to develop Kazakhstan’s role as the new transportation hub of the Eurasian region.

Over the past several years, several foreign car manufacturers came to Kazakhstan to set up their production and compete with the traditionally present Russian-made Ladas. This includes Chevrolet, Ssang Young, Hyundai, and KIA.

According to data of the Kazakhstan Auto Business Association, in 2012, Kazakhstan’s market of new passenger cars and commercial vehicles, including imported ones and those produced in Kazakhstan increased by 217 percent compared to 2011. Last year, the official distributors, dealers, importers and domestic manufactures collectively sold 98,231 units of vehicles in Kazakhstan (including passenger cars, light commercial vehicles and large cars). This figure stood at 45,000 units in 2011. New car imports (without the countries of the Customs Union) amounted to 50,000 units in 2012 (32,000 units in 2011). Russia shipped to Kazakhstan about 55,000 new cars, 7,000 trucks, 579 tractors and 1,300 new buses (a total 64,198 new units). Japan and China are the other major importers (15,700 and 10,600 per country respectively).

According to experts of the Kazakhstan Auto Business Association, in value terms, the Kazakhstan market of passenger cars increased by 108 percent amounting to $ 1.9 billion dollars in 2012. The share of domestically manufactured of passenger cars amounted to more than $ 370 million dollars (19 percent of the market) in 2012.

According to data of domestic automakers, domestic car assembly plants produced 21,236 vehicles in 2012, including 19,094 passenger cars (up 2.3 times compared to 2011) and 1,771 trucks (up 1.9 times), 191 buses (up to 1.7 times) and 180 units of special equipment.

Overall, , the production of cars increased 20-fold in Kazakhstan over three years, having reached significant highs in all sectors. Experts believe that, in many respects, these successes are associated with the country’s entry into the Customs Union of Belarus, Kazakhstan and Russia that has paved the way for investment in the automotive sector, bearing in mind the possibility of the 180 million people market of the three-nation Customs Union.

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