PSA Grows Sales, Production Operations in Kazakhstan

VIENNA – Sales of Peugeot vehicles resume in Kazakhstan following a period in which the brand was completely absent from the country.

But rather than simply appoint a new importer, French automaker PSA Peugeot Citroen launched an assembly project with Kazakhstan’s AllurGroup earlier this year.

Kazakhstan is counted among the emerging markets with rapidly increasing light-vehicle sales.

“The Kazakh market shows a gigantic speed of growth,” Bernd Schantz, PSA managing director-Russia, Ukraine and other CIS countries, tells WardsAuto. “Last year about 98,000 vehicles were sold (industrywide). This year the sales will be perhaps 160,000 units, and one can expect to reach annual sales of 300,000 vehicles in three to four years.”

PSA partner AllurGroup is the Kazakh distributor or retailer of several brands including Mitsubishi, Suzuki, Ssangyong, UAZ and ZAZ cars and Iveco light-commercial vehicles.

The company also owns 50% and has management control of the AgromashHolding plant in Kostanay, which assembles several brands from semi-knocked-down kits.

Under the agreement with PSA, AgromashHolding launched SKD assembly of Peugeot 301, 3008 and 508 cars and Partner LCVs this summer. The agreement includes distribution of Russian-made Peugeot 408 sedans, while other Peugeot cars imported from Western Europe can be sold as well.

“We plan to sell about 2,500 units in 2014, the first complete year, and we intend to be at about 15,000 annual sales in four or five years,” Schantz says.

“We see the market share of the Peugeot brand at at least 3.5%,” Andrey Lavrentyev, president of AllurGroup, tells WardsAuto.

Initially AllurGroup plans to offer Peugeot vehicles in four Kazakh dealerships and eventually expand to 12 outlets.

AllurGroup has especially high hopes for the Peugeot 301, a 1.2L sedan and the least-expensive Peugeot car to be built in the country with a base price of $16,300.

“Peugeot 301 is among the models which are very interesting for the Kazakh market,” Lavrentyev says, noting the car belongs to a high-growth segment.

AgromashHolding until now has been only an SKD assembler. However, the company will launch assembly of the Ssangyong Nomad SUV from complete-knocked-down kits in November.

The Nomad, a modified version of an older Ssangyong model, will be Kazakhstan’s first car assembled from CKD kits. CKD assembly of the Toyota Fortuner SUV will be added in spring 2014.

Lavrentyev would be happy to see Peugeot vehicles locally assembled from CKD kits as well.

“We are trying to convince our colleagues from PSA that PSA should go the way of localization in Kazakhstan, that we are ready to invest,” he says, but “we understand that the cooperation will develop step by step, that it will not happen today.”

Schantz confirms CKD assembly of Peugeot models is under consideration. “The Kazakh government is pushing quite strongly for CKD. It is quite important for them to have CKD, and we are studying it.”

It could be feasible for the partnership to export some vehicles to Russia, Schantz says. For example, Kazakh-assembled Peugeot Partner LCVs could be exported to Eastern Russia because of its proximity to Kazakhstan and consequently lower transportation costs, while PSA would continue to source the Partner from Spain for other parts of Russia.

While the partnership is launching the Peugeot brand in Kazakhstan, plans also call for local assembly of PSA’s Citroen brand in the country.

“In the second phase, which can come quite quickly, we will for sure offer the Citroen brand to our partner as well,” Schantz says.