By Azerbaijan’s automotive sector shifts gears with new investments. The country aims to boost its domestic production and exports of vehicles with the help of foreign partners, according to a recent article by bne IntelliNews. The article reports that Azerbaijan has attracted several international carmakers to set up assembly plants in its industrial zones, and that it plans to increase its vehicle output and market share in the region.
Russia’s AvtoVaz leads the way with a large-scale assembly plant in Baku. The Russian carmaker, which produces the popular Lada brand, announced in January that it will launch serial production of its vehicles in Azerbaijan, in partnership with a local company, Azermash. The plant, which will be located in the Baku Industrial Zone, will have an annual capacity of 10,000 units, and will create 300 jobs.
The plant will assemble various models of Lada, such as Granta, Vesta, Xray, and Niva, and will export them to neighboring countries, such as Georgia, Turkey, and Iran. The plant will also use local components, such as tires, batteries, and glass, to reduce costs and increase localization.
The arrival of AvtoVaz in Azerbaijan is a significant boost for the country’s automotive sector, as it will increase the availability and affordability of vehicles for the domestic market, and will generate revenues and employment for the economy. AvtoVaz is also expected to announce some good news this spring regarding its presence in the region, according to its head, Maxim Sokolov.
Other carmakers are also expanding their operations in Azerbaijan
Other carmakers are also expanding their operations in Azerbaijan. The article mentions that several other international and regional carmakers have established or plan to establish assembly plants in Azerbaijan’s industrial zones, such as:
- Iran’s Khodro, which produces the Samand and Dena brands, and has a plant in the Neftchala Industrial Zone, with an annual capacity of 10,000 units.
- Belarus’ MAZ, which produces buses and trucks, and has a plant in the Ganja Industrial Zone, with an annual capacity of 1,000 units.
- Turkey’s BMC, which produces buses, trucks, and military vehicles, and plans to build a plant in the Balakhani Industrial Zone, with an annual capacity of 2,500 units.
- China’s Changan, which produces passenger cars and SUVs, and plans to build a plant in the Sumgait Industrial Zone, with an annual capacity of 5,000 units.
These carmakers will also contribute to the development of Azerbaijan’s automotive sector, by offering more choices and options for the consumers, and by creating more jobs and exports for the economy. They will also benefit from the favorable conditions and incentives that Azerbaijan offers to the investors, such as tax exemptions, low tariffs, and free trade agreements.
Azerbaijan’s automotive sector has grown rapidly in recent years, but still faces some challenges
Azerbaijan’s automotive sector has grown rapidly in recent years, but still faces some challenges. The article notes that Azerbaijan’s automotive production has increased from 712 units in 2018 to 4,233 units in 2023, marking a 109% increase. In January 2024, 406 cars were produced in Azerbaijan, which is twice the figure of the same month last year.
However, the article also points out that Azerbaijan’s automotive sector is still very underdeveloped and primarily focuses on assembling final products rather than making them from scratch. The sector also faces some competition and pressure from the imported vehicles, which account for the majority of the market share. The sector also lacks sufficient infrastructure and skilled workforce to support its growth and innovation.
The article concludes that Azerbaijan has a huge potential and opportunity to develop its automotive sector, as it has a large and growing domestic market, as well as access to the regional and global markets. The article also suggests that Azerbaijan should diversify its vehicle portfolio and increase its localization rate, as well as invest in research and development and human capital, to enhance its competitiveness and sustainability in the automotive industry.