The FINANCIAL — Georgian auto dealers have ended the first quarter of 2016 with over 30% of sales drop. With 3, 287 units, Mercedes-Benz is the bestselling auto brand in Georgia during current year. It is followed by another German brand Opel, Japanese Toyota and Nissan and German BMW, each counting more than 1,000. The current year has been another difficult year for auto dealers, as total import has dropped by over 30% and re-exports – by 35%.
In total, 17, 615 units of vehicles (worth USD 99, 362, 200) were imported to Georgia from January-March 2016. The number was 24, 930 (or USD 145, 917, 100) during the same period of the previous year. Annual data comparison has shown over 30% decrease.
Mercedes-Benz was the top imported vehicle in Georgia for the first quarter of 2016. The number reached 3,287 units, worth USD 19,247,600. It was followed by Opel, with 1,298 units, worth USD 2,466,300; Toyota -1,231 units worth USD 14,387,900; Nissan – 1, 203 units, worth USD 3, 890, 600 and BMW – 1,134 units, or USD 7, 517, 800.
While all auto brands have seen a reduction in import this year, there were only three exceptions. German Audi, American Ford and South Korean Hyundai have seen a slight increase in import this year, in comparison with the prior year. 391 units of Audi brand cars, worth USD 11,481,400, have been imported to Georgia this year, up from 244 units, or USD 1, 802, 400, from January-March 2015. Import of Ford has amounted to 165 units with year, up from 111 from the previous year. Number of imported Hyundai brand cars has totaled 180 during the first quarter of 2016, up from 146 from the same period of the previous year.
In his TV interview, Irakli Gurchiani, President at Toyota Center Tbilisi has distinguished 2007 as the bestselling year for his company. According to him, the company was selling over 35 units daily, however currently the number hardly reaches 30 units monthly. Dramatic fall of sales Gurchiani explained with economic stagnation.
Georgian auto dealers managed to re-export just 2, 631 units (worth USD 36,785,700) this year. The figure was 4, 036 units (valued at USD 55,929,000) in January-March 2015. With 1,524 units, Armenia remains the top country in terms of re-exported cars from Georgia. At first time this year, Georgians managed to re-export 276 vehicles to Switzerland. Number of re-exported cars to the UAE has numbered 217. Russia has shared 193 units and Azerbaijan – 151.
Georgia’s re-export to neighbouring Armenia was 2,019 units last year, while Azerbaijan counted 1, 310 cars for that time. The two countries used to be the main target for Georgian auto dealers for a long time.
With 760 units Mercedes-Benz has been the top re-exported vehicle from Georgia during the first three months of 2016. It is followed by Opel – 479 units; Toyota – 306; Audi – 281 and Nissan – 179 units.
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.
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