Fitch Upgrades UzAuto Motors to 'BB' with Stable Outlook

Tashkent, Uzbekistan (UzDaily.uz) — International rating agency Fitch Ratings has upgraded the Long-Term Issuer Default Rating (IDR) of JSC UzAuto Motors (UAM) from "BB-" to "BB." The rating outlook remains "Stable." Concurrently, the agency has upgraded the rating of the company's senior unsecured Eurobonds to "BB" and assigned a Recovery Rating of "RR4."

Fitch explained that the rating action reflects an improvement in the automaker's Standalone Credit Profile (SCP), which has been revised upward from "b-" to "b." This positive adjustment was driven by the successful refinancing of the company's Eurobonds, enhanced liquidity buffers, and the expectation of positive free cash flow (FCF) generation over the 2026–2029 period. At the same time, the agency notes that UzAuto Motors' credit rating continues to rely heavily on the high likelihood of state support, which Fitch assesses as "extremely probable."

A key factor behind the rating upgrade was the successful restructuring of UAM's debt obligations. In November 2025, the company successfully placed $350 million in senior unsecured Eurobonds maturing in November 2030. The proceeds were utilized to fully redeem its $300 million Eurobond issue that was scheduled to mature in May 2026, as well as to repay a portion of its outstanding debt to local commercial banks.

According to the rating agency's assessment, the company's financial position has visibly strengthened. By the end of 2025, UzAuto Motors' cash reserves increased to $89.5 million, compared to $42.8 million recorded a year prior. Additionally, the automaker maintains access to approximately $70 million in unused capacity under export credit lines and a syndicated term loan. Fitch expects the company's liquidity to improve further as it transitions to positive free cash flow.

Following two years of softer domestic demand and tighter credit conditions, the local market has begun to recover. By the end of 2025, UzAuto Motors sold nearly 400,000 vehicles, while the average domestic vehicle price rose to $10,600. The company's total revenue reached $4.1 billion, and its Fitch-defined EBITDA amounted to $355 million, comfortably exceeding the agency's initial forecast of $307 million.

Despite these improved financial indicators, free cash flow in 2025 remained negative at minus $52 million. Fitch attributes this deficit to an increase in working capital tied up in outstanding receivables from car loans granted directly to customers. The agency projects that free cash flow will turn positive starting in 2026 as these outstanding retail loans are gradually repaid and the company discontinues its direct consumer financing schemes.

Fitch also highlighted the extensive level of state involvement in the company. The Government of Uzbekistan indirectly controls a 99.7% equity stake in UzAuto Motors, actively participates in approving capital expenditure (capex) and funding decisions, and influences pricing strategies—particularly within the budget-friendly passenger car segment. Examples of state support include tax exemptions, equity loans, and protective customs tariffs on imported vehicles.

The rating agency emphasized that UzAuto Motors remains a strategically critical enterprise for the Uzbek economy. As the sole domestic volume automaker, the company directly and indirectly supports over 30,000 jobs, plays a prominent role in the consumer lending ecosystem, and served as Uzbekistan's pioneer corporate Eurobond issuer. Fitch notes that any potential default by UAM would have severe negative implications for the sovereign and other state-owned enterprises seeking access to international capital markets.

However, the automaker's credit profile remains constrained by its high concentration in the domestic market (where it commands an 80% market share), a narrow model lineup, the lack of an independent automotive brand, and its operational reliance on long-term licensing agreements with General Motors.

Under Fitch's rating case, UzAuto Motors' sales in 2026 are projected to reach 400,000 units, with average vehicle prices climbing slightly to $10,800. Annual revenues are forecast to rise to $4.4 billion in 2026 and expand to $4.7 billion by 2029. The agency also expects UAM's EBITDA margin to stabilize around 9.5% by 2029, with annual capex holding at approximately 1.4% of revenues and no major mergers or acquisitions planned.