The FINANCIAL — With 13,069 units, out of a total of 53,300 vehicles imported in Georgia during January-October 2015, Mercedes-Benz is the bestselling auto brand in Georgia. The German brand is followed by Japanese Nissan and Toyota, each counting more than 5,000. The current year has been another difficult year for auto dealers, as total import has dropped by over 20% and re-exports – by 62%.
In total, 53,300 units of vehicles (worth USD 339,950,800) were imported to Georgia from January-October 2015. The number was 65,736 (or USD 552,936,400) during the same period of the previous year. Annual data comparison has shown a 19% decrease.
Mercedes-Benz was the top imported vehicle in Georgia for the first ten months of 2015. The number reached 13,069 units, worth USD 78,837,000. It was followed by Nissan, with 5,578 units, worth USD 19,611,800; Toyota – 5,453 units worth USD 69,050,000; BMW – 5,140 units, or 35,801,500; and Opel – 5,001 units worth USD 10,942,500.
While all auto brands have seen a reduction in import this year, there was only one exception. German Audi has seen a slight increase in import this year, in comparison with the prior year. 851 units of Audi brand cars, worth USD 13,565,000, have been imported to Georgia this year, up from 800 units, or USD 5,549,600, from January-October 2014.
Georgian auto dealers managed to re-export just 14,927 units (worth USD 147,569,600) this year. The figure was 39,270 units (valued at USD 236,280,400) in January-October 2014. With 9,490 units, Armenia remains the top country in terms of re-exported cars from Georgia. It is followed by Azerbaijan, with 3,121 units. Georgia’s re-export to neighbouring Armenia was 20,145 units last year, while Azerbaijan counted 15,486 cars for that time.
The dramatic reduction of automobile sales in Azerbaijan from Georgia started in 2014. The Azerbaijani Government has now banned the import of cars that use fuel of a standard below Euro-4, consequently the export from Georgia to Azerbaijan of vehicles produced before 2005 (which used to be in the highest demand) has completely stopped.
According to the Director of the export trading company “Zario Auto” Joseph Zarandia, after the introduction of the new regulations, the export of Japanese cars to Azerbaijan has virtually stopped, and dealers have basically switched to American cars.
Previously, Japanese cars made up a very large share of those exported to Azerbaijan, while now preference is given to American vehicles produced since 2005. Exports fell in July 2014. Of course, we cannot say that Azerbaijan, as a country importing cars, is completely lost as an export market for Georgia, but the number of cheap cars that could be bought in Georgia is reduced and expensive cars can be purchased in showrooms in Azerbaijan. It was very profitable to sell Japanese cars, as they have always been of high quality, in very good condition, with low mileage, and the Azeris bought them gladly,” said the dealer.
According to him, due to the current situation in the market, many dealers have ceased operations altogether.
While the loss of the Azerbaijani market has resulted from the country’s will to enhance standards, in the case of Armenia the reason was its political will to join the Eurasian Customs Union.
In 2015 Armenia became a fully-fledged member of the Russian-led Eurasian Customs Union (ECU). Georgia, on the other hand, signed the Association Agreement (AA) and the Deep and Comprehensive Free Trade Area Agreement (DCFTA) with the European Union. New regional divergence, and two different choices that have been made in the same region, have impacted on the trade relations between the two countries.
In 2013 automobiles were the largest re-export product from Georgia to Armenia. Approximately USD 120.5 million worth of automobiles went to Armenia, comprising 38 percent of total exports from Georgia. The new tariffs have affected not only bilateral trade and auto-dealers, but also the interests of Armenian consumers.
The situation with car re-exports from Georgia to Kazakhstan developed similarly after the latter joined the ECU. However, export to Kazakhstan was mostly low, with a huge jump in 2011 and equally rapid drop in the next year, whereas car exports to Armenia were characterized by very steady growth since 2009. Thus, in the case of Armenia, Georgian auto dealers are losing a bigger market.
The current year has been successful for AKA Mercedes-Benz Georgia. The company sold 99 units during January-June 2015, up from 65 units from the same period of the previous year. With 24 units, Mercedes GLA has been the bestselling brand of the company this year. The price of this model varies from EUR 28,000 to EUR 40,000.
“The sales increase at our company has been the result of the new models that we have offered. Reduction of the EUR towards the USD also contributed to our sales increase. The cost of cars denominated in USD has been reduced by 15-20%,” Lasha Lomidze, Sales Manager at AKA Mercedes-Benz Georgia, told The FINANCIAL.
According to Lomidze, since the GEL’s devaluation, prices of vehicles have been slightly reduced. “We have fees denominated in EUR, which devaluated against the USD,” said Lomidze.
“As of June we have seen a 52% sales increase. We expect to have a minimum 30% sales growth this year in comparison with the previous one,” Lomidze said.
Toyota Center Tegeta sold 341 units during January-June 2015. With 150 units, Toyota Land Cruiser Prado has been the bestselling brand. The cost per unit varies from USD 32,995.
“With the support of the auto supplier Toyota Caucasus and Central Asia office we managed to revise our price policy this year. In addition, the company has offered various marketing activities to customers,” said George Kobakhidze, Sales Manager at Toyota Center Tegeta.
Like Lomidze at Mercedes-Benz, Kobakhidze is optimistic in terms of sales this year. “We expect to doubles sales in the second part of the year,” Kobakhidze told The FINANCIAL.
Toyota Center Tegeta has offered the RAV 4, with Turbo Diesel engine and Toyota Corolla models.
Toyota Center Tegeta was established in Georgia in the second part of 2014. It is the second dealer offering Toyota brand cars to customers after Toyota Center Tbilisi.
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