How Chevrolet Ruled Uzbekistan
WHY YOU SHOULD CARE
Monopolistic policies ensured that Chevys were expensive, unwanted … and that absolutely everyone needed one.
By Nikita Makarenko
You could choose any car in Uzbekistan, as long as it was a Chevrolet. Even now, with asphalt melting on the streets of Tashkent in the June heat, it’s a Chevy-heavy dystopia: Nexias, Malibus, Trackers, Cobalts and Sparks whiz by, occasionally joined by an old Soviet Lada, a ghost from the past.
Uzbekistan declared independence from the Soviet Union in 1991, and just a year later began building a $600 million car plant — Central Asia’s largest — founded by the Uzbek government and Korean company Daewoo. In 1996, the first car rolled off the assembly line. Daewoo, in turn, was bought by General Motors, and as of 2008, the plant was renamed for GM and began producing Chevys. Three years later, 94 percent of the cars sold in Uzbekistan were Chevrolets, making it the car company’s most monopolized market.
That didn’t exactly come naturally. In fact, GM’s internal market was protected by the government: Used cars manufactured outside of Uzbekistan saw — and in fact still see — high import tariffs. While numbers vary depending on the use and age of the car and the size of the engine, estimates from last year indicate that customs duties could amount to more than twice the price of the car itself.
2012 saw more than 225,000 Chevys produced in Uzbekistan, but only just over half were actually sold to the 30 million-strong Uzbek population.
“Who benefited from this experiment? A small group of bureaucrats in the government and company managers, who were getting and still get their slice of the pie, and it is billions of dollars yearly,” explains prominent Uzbek economist Yuliy Yusupov, who is known for his struggle against monopolies. “The customer has no choice but to pay more.” Without a supply of foreign cars able to compete, Chevy prices themselves zoomed up. Between 2012 and 2013, prices for a Chevrolet Nexia increased more than 24 percent. At the time, local media reported that a Nexia cost nearly $17,000, a hard sell to a population whose average salary was about $200 a month. One 2014 calculation also found that the same cars dropped in price when exported: A $14,000 Chevy in Uzbekistan went for less than $8,000 after it was exported to Belarus.
Still, Uzbeks needed cars, and Chevys were what they could get. But there weren’t enough: 2012 saw more than 225,000 Chevys produced in Uzbekistan, but only just over half were actually sold to the 30 million-strong Uzbek population. Waiting times to buy a car stretched to more than a year … unless, of course, you could pay a bribe, which became known as a shapka, or hat.
“In 2013, my company ordered a Chevrolet Cobalt. It cost $20,000. But we had to pay $2,000 more in cash to the dealer. There was no other way to buy a car,” says Jakhongir, a businessman from Tashkent who asked that his name not be shared.
A few times a year people had a chance to buy a Chevy without a shapka: Dealers who’d just received a rare shipment would open their doors to a free-for-all, with people literally fighting their way to get in and get one of the vehicles.
A lot has changed in Uzbekistan since 2013. A new president, Shavkat Mirziyoyev, who took power in 2016 after the death of longtime authoritarian ruler Islam Karimov, has begun a massive process of liberalization dubbed “The Uzbek Thaw.” In December 2018, GM sold all its shares in its local plant to the Uzbek government. Still, the car monopoly has endured in significant ways. The plant is still using the Chevrolet brand and technologies via special agreement. And earlier this month, Uzbek news outlet Kun.uz published results of a poll asking, “Who is the most ferocious monopolist in Uzbekistan?” Sixty-six percent of readers voted for General Motors. Still, there are signs that Chevy’s grip on the region may not be permanent.
“The car plant does not help us,” Mirziyoyev said last month during a visit to eastern Uzbekistan, where the factory is located. “The plant should create 10,000 jobs. Otherwise, we don’t need it.”
For years, consumers have been unhappy with Chevrolet’s monopoly. Now the president is unhappy too — but in an authoritarian Central Asian state, that’s what might make the difference for the future.
- Nikita Makarenko, OZY Author Contact Nikita Makarenko