The Business Year

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Kanat Akishev

Director, Mercur Auto Mercur Auto

Farrukh Makhmudov

Chairman, Avtodom

Despite globally tumultuous times for the automotive industry, Kazakhstan has been able to find creative and successful ways to maintain the market.

How have you preformed over the past few years, despite an economic downturn and turbulent automotive industry?

KANAT AKISHEV We had major changes on the government side because there were new taxes from the last two years and in 2016 we had a new utilization fee and new registration fee, which caused great confusion for the global Kazakhstan market. In our company, we take more deliveries from Russian Volkswagen production. For all marques, for example, we saw in the last two to three years the share of Russian production in Kazakhstan and Kazakhstani production increasing dramatically, while the delivery of imported cars from Germany has fallen. Production in Russia of Volkswagen for other brands has increased in that time.

FARRUKH MAKHMUDOV Any crisis is an excellent stress test to evaluate the sustainability of the business. It is an opportunity to determine and reveal our advantages, as well as areas for further improvement. Several years of intensive work in a challenging environment have strengthened our team and prepared it to overcome the difficulties. At the core of our business success lies effective team effort, which has allowed us to go through these crises smoothly.

How would you define your position in terms of market share in Kazakhstan?

KA Our target for Volkswagen is to have 5% of market share for this year. I hope to exceed this target with 5.3%. We also distribute Audi and Porsche. We concentrated on the Volkswagen group as it is for us an ideal business strategy. Volkswagen AG can suggest the perfect product for every customer—premium segment cars like Audi and Porsche and semi-premium like Volkswagen. Volkswagen is not truly affordable; semi-premium means a customer can buy a premium product at a great price. The last two years we have had some strategies not for the internal market because we have large deliveries from Russia as cars from Russia are cheaper.

FM How to identify the company’s market share in such uncertain times? Well, that is mainly the question to the market: How will it define us. I am confident that our business has demonstrated a degree of consistency and stability, and has been sufficiently reactive to the external events. We regard customer-orientation as our key source of competitive advantage and prioritize client satisfaction. We continuously develop our product range to offer various solutions to our customers, including package offers, flexible trade-in, auto-replace, a diversity of financial services, special entertainment programs during the waiting time, as well as pickup and transportation to destination.

What is the potential of the automotive industry in Kazakhstan in the coming years?

KA We depend on oil prices as this is connected to the economic situation and if it is better then we can sell more. However, our company has a strategy to develop not only car sales volume. Depending on the economic situation, there is huge potential in dealer network development to sell more accessories and spare parts. That is our long-term strategy and we are seeking good regional partners in Kazakhstan. We work with dealer centers and look for new business people who want to have partnerships with us.

FM The automobile market has shrunk three times relative to its previous period indices, when we used to sell an average of 160,000 cars annually. I believe that we have reached the market bottom and upcoming years will treat us with moderate growth and steady stabilization of the market. In the short run it is probable that prices will exhibit an upward movement: after initially reducing prices to sustain market share, manufacturers have now started to increase them back systematically. In the long run it is expected that businesses who left the market will re-enter it and a subsequent redistribution of market shares will follow.



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