Rapid Expansion of Kazakhstan's Mechanical Engineering Sector, Recording a 11.1% Increase in the First Half of the Year
Kazakhstan's mechanical engineering industry is experiencing a significant growth spurt, driven by strategic investments, international collaborations, and government-backed reforms. The sector, which accounts for approximately 19% of the total manufacturing output, is poised for expansion across various key sectors, including automotive, railway, electrical, agricultural machinery, and electronics.
Investment and Industrial Growth
The government of Kazakhstan is actively courting long-term strategic investors in mechanical engineering and related sectors. Notable companies like John Deere (agricultural machinery) and KIA (automotive) have shown interest, with the government offering streamlined investment processes such as a national digital investment platform, green corridors, and protective legislative amendments to simplify regulation and attract capital. In 2024-2025, numerous investment agreements totaling billions of dollars have been signed, signaling a major capital infusion and technology transfer into the industry.
Capacity Expansion and Modernization
Although metallurgy remains dominant in manufacturing output (over 40%), mechanical engineering, including railway and electrical equipment, is receiving increased attention as part of industrial diversification. Existing enterprises aim to resolve production bottlenecks through government-backed roadmaps, regional cooperation, and capacity upgrades. For example, the modernization of power grids is underway to support energy supply for industrial sectors.
Technological and Industrial Collaboration
Kazakhstan is embracing international partnerships to advance industrial transformation and innovation. Chinese firms like CAMCE are integrating green development principles and local market adaptation under the Belt and Road Initiative, targeting sectors including electrical and machinery manufacturing. This approach aims to blend foreign R&D and supply chains with local needs, enhancing mechanical equipment quality and sustainability.
Sector-Specific Outlooks
- Automotive: Partnerships with KIA and others target expanding domestic production capacity and integrating modern automotive technologies. - Railway: Mechanical engineering extends to railway equipment manufacturing, supported by investments and infrastructure modernization plans. - Electrical Machinery: Modernization of power grids and related equipment emphasizes sustainability, supported by funding like green bonds and syndicated financing. - Agricultural Machinery: Investors like John Deere contribute to enhancing manufacturing and technological capabilities in agricultural machinery, aiming at both domestic needs and export potential. - Electronics: While less detailed in the sources, electronic sector development ties into broader mechanical engineering and industrial modernization goals, leveraging foreign partnerships and R&D.
New Developments
Two new plants are expected to be launched in Kazakhstan this year: a multi-brand factory in Almaty (producing CHANGAN, Haval, CHERY) and a KIA plant in Kostanai. The Transport Ministry has proposed limits on the operation of outdated rolling stock, with regulatory documents under approval. The new Stadler Kazakhstan plant in Astana marks a significant transformation in the industry.
In the first half of the year, Kazakhstan's mechanical engineering industry experienced a 11.1% growth, with the growth driven by several sectors. Automotive production saw a +12.1% increase, railway and other vehicles a +7.1% increase, agricultural machinery a +1.3% increase, electrical engineering a +21.5% increase, electronic and optical equipment a 1.7-fold growth, and machinery repair and installation a +12% increase. In the first half of 2025, over 4,000 tractors (+39.3%) and 441 grain harvesters (+64.6%) were manufactured in Kazakhstan.
Starting from this year, TVs and washing machines will be manufactured under the Samsung brand in Kazakhstan. Domestic producers in Kazakhstan meet 90% of the market demand for tractors and combines. However, no growth rate for the mechanical engineering industry in the first half of 2025 was provided. Kazakhstan plans to produce nearly 147,824 vehicles in 2023, with a potential for exceeding this figure. Railway equipment production accounted for 13% of the industry in 2024, with 125 locomotives and over 2,700 cars produced, worth 599.3 billion tenge (US$1.1 billion). Electrical products make up around 9% of the sector, with over 270,000 units of household appliances produced in 2024.
In conclusion, Kazakhstan's mechanical engineering industry is on an upward trajectory, with strategic investments, international collaborations, modernization of infrastructure, and government-backed reforms driving growth across various sectors through 2025 and beyond.
- The automotive industry in Kazakhstan is fostering growth through strategic partnerships, with KIA and other companies targeting expanded domestic production and incorporation of modern automotive technologies.
- The finance sector plays a crucial role in supporting Kazakhstan's mechanical engineering industry, as significant capital infusions and technology transfers have been facilitated by investment agreements totaling billions of dollars.
- The transportation industry in Kazakhstan is undergoing significant changes, with new plants being launched for production of vehicles from brands like CHANGAN, Haval, CHERY, KIA, and potentially Samsung, as well as the modernization of existing rail infrastructure to accommodate increased production of railway equipment.
