AvtoVAZ commits $500 million to new Kazakhstan plant
Russia’s AvtoVAZ will partner with Asia Auto to build a $500 million assembly plant in East Kazakhstan, aiming for 120,000 cars a year and a 70% localisation rate by 2015.
AvtoVAZ, Russia’s largest carmaker, has announced a $500 million investment to build a new assembly plant in Kazakhstan, aiming to expand its presence in Central Asia. The company will work with local partner Asia Auto to construct the facility in the East Kazakhstan region, with production scheduled to begin in 2015.
The new factory will have an annual capacity of 120,000 vehicles once fully operational. In the first phase, AvtoVAZ and Asia Auto plan to assemble 90,000 cars a year, with the remaining 30,000 to be added in a second phase from 2017. The partners are targeting a localisation rate of 70 percent by 2015, which would see most components sourced within Kazakhstan.
Production plans and regional strategy
AvtoVAZ intends to use the new plant to build the next generation of Lada vehicles, alongside two models based on Renault-Nissan global platforms. The decision follows moves by other global manufacturers to increase production in emerging markets, with Central Asia identified as a region with strong growth potential over the next five years.
Asia Auto’s role and current output
Asia Auto, AvtoVAZ’s partner in the project, already assembles vehicles for several international brands in Kazakhstan. Its current output includes models from Škoda, Chevrolet and Kia, such as the Octavia, Superb, Yeti, Captiva, Epica, Lacetti, Cruze, Aveo, Sorento, Mohave, Cerato and Sportage. The joint venture with AvtoVAZ marks a step up in scale and ambition for the local assembler.
What it means for jobs and suppliers
The investment is expected to create new jobs in the region and stimulate the development of Kazakhstan’s automotive supply chain. Achieving a 70 percent localisation rate will require significant growth in local component manufacturing, potentially benefiting parts suppliers across the country. The move also supports Kazakhstan’s goal of developing its own automotive industry and reducing reliance on imports.
With production set to begin in 2015, AvtoVAZ’s Kazakhstan plant will join a growing list of new automotive facilities in emerging markets as manufacturers look to tap into regional demand and secure local supply chains.
