Just a few years ago, the development of Kostanay Region’s automotive industry could be described quite simply: the region was increasing vehicle output and attracting large assembly operations.
Today, the picture is becoming more complex.
A domestic production chain is gradually forming around the car plants: foundry operations, reduction gears, cable systems, plastic parts, body components and, eventually, domestically produced automotive steel. At the same time, a system for training engineers and production personnel is being created.
The main result of recent years is therefore no longer only the growth in vehicle output. The automotive industry is beginning to generate other production activities around itself and evolve into an industrial cluster.
A quarter of the country’s mechanical engineering
Mechanical engineering has become one of the main drivers of economic growth in Kostanay Region. Enterprises in the region now account for around 25% of Kazakhstan’s total mechanical-engineering output.
The KIA plant is one of the largest new projects.
Investment in the plant totals KZT 131.5 billion, with design capacity of 70,000 vehicles a year. The plant has created 1,500 jobs. According to calculations in regional materials, its launch could increase the region’s manufacturing output by 46.5%.
A plant of this scale already changes the region’s industrial statistics. But another effect is far more important: large-scale vehicle production creates continuous demand for parts, materials and technological processes.
The more of that demand can be met domestically, the stronger the automotive industry’s effect on the rest of the economy.
Casting, reduction gears, components: production begins to expand
One of the first elements of the new chain was the KamLitKZ iron foundry, launched in 2024.
It is Kazakhstan’s first specialised facility of this scale. Investment totalled KZT 78.2 billion, annual capacity is 45,000 tonnes of cast products, and 500 jobs were created. Its output is used in tractors, commercial vehicles and automotive components both in Kostanay and elsewhere in Kazakhstan.
But development at the site did not stop with the foundry.
Two more projects have been implemented at KamLitKZ: an automotive-components plant for commercial vehicles and a full-cycle complex producing drive-axle reduction gears. Combined investment totals KZT 160.5 billion, design capacity is 164,000 units a year, and 650 jobs have been created.
This is already a different model of industrial development.
Instead of a model in which finished assemblies are mostly imported and installed at the assembly plant, part of the technological process moves into the region:
smelting → processing → component production → final assembly.
Each additional link means new investment, jobs and capabilities.
Localisation is becoming an industry in its own right
The next level is the production of large numbers of less visible but critically important components.
For this purpose, a localisation centre has been created in Kostanay on the basis of TEHNOPARK KZ. Investment totalled KZT 17.8 billion. The facility has capacity for 60,000 component sets a year and has created 800 jobs.
It produces cable systems, plastic parts, instrument panels and modular assemblies for Kazakhstan’s car plants.
Facilities of this kind show why the level of localisation matters not only to the automotive industry itself.
A car plant purchases thousands of different parts. As long as most are produced outside the country, a significant share of the value created by each vehicle remains outside Kazakhstan’s economy. When components begin to be produced domestically, the same vehicle output generates a substantially larger internal economic effect.
A market emerges not only for one major manufacturer, but for dozens of potential suppliers.
The shift from assembly to localisation is therefore also a shift from a single enterprise to an industrial ecosystem.
The next step: a Kazakhstani vehicle body
The Allur–Qarmet–Kia Qazaqstan project is especially revealing.
It provides for a production chain in which body parts are made from domestically produced automotive steel and then welded into complete bodies. Steel production is planned for 2028 and body-part stamping for 2030. Design capacity is at least 50,000 bodies a year, with the share of Kazakhstani steel expected to reach 75%.
For Kazakhstan, this represents a fundamentally new stage of processing.
The automotive industry is beginning to link directly with metallurgy:
Kazakhstani steel → stamping → body → vehicle.
Demand originating at an automobile plant in Kostanay therefore begins to spread beyond the region itself and create a basis for the development of other sectors of the national economy.
This is one of the key effects of industrial localisation. A new plant becomes a customer for existing industries and at the same time creates a market for new ones to emerge.
If this process continues, the economic effect of the automotive industry will no longer be measured only by the value of vehicles produced.
Li Auto: localisation moves beyond hardware
Another important signal appeared in the summer of 2026.
On 16 July, an agreement with Li Auto was signed in Shanghai. Kazakhstan became the company’s first overseas industrial partner and the brand’s first production location outside China.
The content of the agreement itself is noteworthy.
It covers more than the production of new-energy vehicles. The project also provides for the development of engineering capabilities among Kazakhstani specialists and software localisation, including adaptation into the state language.
For the automotive industry, this is the next level of complexity.
A modern vehicle is increasingly more than metal, an engine and mechanical parts. A growing share of the product consists of electronics, software, control systems and digital services.
Future localisation therefore needs to mean not only producing physical components, but also participating in the engineering and digital development of the vehicle.
If this direction develops, another layer may emerge around the automotive cluster—engineering and technology.
Production needs its own skills base
The deeper localisation becomes, the more requirements for workers change.
Simple assembly and the production of complex automotive components require different levels of expertise. Casting, stamping, reduction-gear production, engineering, automation and software gradually raise qualification requirements.
Kostanay is therefore building its own workforce-training system alongside its factories.
More than 4,200 employees and students have trained through Allur University. A further 378 college and university students completed paid internships, while around 1,900 engineers received production training in CKD assembly technologies.
This element is easy to underestimate, but it is fundamental to an industrial cluster.
Without its own skills pipeline, production growth quickly runs into shortages of engineers, technologists and skilled workers. Education programmes therefore become as much a part of industrial infrastructure as energy or logistics.
The relationship also works in reverse: large production facilities give colleges and universities real demand for specific skills and provide sites for practical training.
One vehicle creates far more economic activity than the vehicle itself
This is where the logic of the Kostanay model becomes clear.
The automotive industry can be measured by the number of vehicles produced. But for the regional economy, a much more important question is how many production operations around each vehicle take place within the country.
If a vehicle is assembled mainly from imported components, most of the effect is concentrated at the assembly plant.
If castings, reduction gears, plastic parts, cable systems, body components and steel are produced within Kazakhstan, the same vehicle generates demand across an entire network of enterprises.
Each new link in the production chain increases domestic value added and at the same time creates a market for the next business.
That is why today’s Kostanay projects are interesting not as isolated initiatives.
KIA provides the scale of final production. KamLitKZ provides domestic casting and components. TEHNOPARK KZ deepens component localisation. The Allur–Qarmet–Kia Qazaqstan linkage is expected to add domestic steel and vehicle bodies. The partnership with Li Auto opens the possibility of entering engineering and software capabilities.
Together, they are beginning to form a chain that did not exist in this form just a few years ago.
From an automotive centre to an industrial cluster
Kostanay Region can already regard automotive manufacturing as one of its key specialisations. But the next stage of the industry’s development will be determined less by how many vehicles are produced and more by the depth of the production system around them.
The key indicators are different: what share of components is produced domestically, how many local suppliers appear around major enterprises, which technological operations can be localised, how quickly engineering capability grows, and whether new production facilities emerge around those already operating.
These criteria will show whether the transition from vehicle assembly to a full industrial cluster has actually taken place.
The first links in this chain are already operating in Kostanay.
The task now is to ensure that every new vehicle generates more and more production beyond the car plant itself.