Azerbaijan and Georgia – Most Promising Markets for Toyota Caucasus & CA

Azerbaijan and Georgia – Most Promising Markets for Toyota Caucasus & CA

The FINANCIAL -- Toyota Caucasus and Central Asia ended the first half of 2015 with a 40% sales reduction in the region. The Russian-Ukrainian crisis was the main factor that contributed to the drop. Current macro-economic stability makes the management of Toyota C&CA optimistic about reaching the sales figures of the previous year. Meanwhile, the most promising country in terms of sales statistics remains Azerbaijan, placing Georgia second.  

“The company is observing a trend of reduction in each country of the Caucasus and Central Asia region. Our sales have dropped by 40% this year, in comparison with the same period of the previous year. I would not say that consumers have switched to purchasing cheaper-priced vehicles. They have just stopped buying cars of any cost,” Yuji Wagata, President at Toyota Caucasus and Central Asia, told The FINANCIAL.

“There were three main factors that contributed to this reduction. The first was the national currency’s devaluation, over 30-40% in each country of the region. It resulted in the shrinking of the market. Consumers became more cautious about purchasing in general. A car is a luxury commodity. It is quite an expensive product. The second reason was the dramatic fall in oil prices. Maybe it was good for Georgia as an importer country, but it had a big impact on Russia and Azerbaijan, the main economic partner countries of Georgia. Domestic political issues were also factors that impacted on overall economic conditions. For example, Armenia, which is one of our sales markets, decided to join the Eurasian Economic Union. This created some confusion in the market. It negatively impacted on the country’s economy,” Mr. Wagata said.

However, Wagata added that we have recently been observing relative stability of the macro-economic indicators. This makes him optimistic that recovery will follow soon.

Toyota Caucasus and Central Asia LLC was founded in January 2006 and started operations in April of the same year with its head office located in Tbilisi, Georgia. Toyota Caucasus and Central Asia is responsible for the business development of Toyota and Lexus in six countries of the Caucasus and Central Asia.

According to GeoStat, in total, 40,048 units of vehicles (worth USD 216,649,400) were imported to Georgia from January-May 2015. The number was 35,147 (or USD 262,064,400) during the same period of the previous year. Annual data comparison has shown a 14% increase.

With 20,545 units, Japan is the top country from which the largest number of vehicles is imported in Georgia. It is followed by the U.S. - with 9,013 units, and Germany - 6,837.

Toyota has been one of the bestselling auto brands in Georgia. In his interview with The FINANCIAL, Mr. Wagata talks about what is involved in running a business in a region facing such difficult economic conditions.

Q. Which of the countries of the Caucasus and Central Asia region are better at avoiding the effects of the existing crisis, and which of the markets seem the most promising to you?

A. If a country has natural resources like oil or copper, or other minerals, we will see immediate recovery when the cost of these resources enhances on the global market. Accordingly, these countries will recover sooner.

Q. Which country would you distinguish as having the best sales in the region for now?

A. Our biggest market in the region is Azerbaijan. It is followed by Georgia. Toyota has enjoyed the leading market positions in both countries for many years and we are sincerely grateful to our customers for their loyalty to our brand.

Q. What are your expectations of 2015 in terms of sales in Georgia?

A. We sold 1,500 units in Georgia in 2014. We have seen an obvious slow-down in the first half of the year. However, it is still too early to make any accurate forecasts regarding the year’s end. We are holding on to the hope that recovery will happen earlier than initially thought. At least we will do our best to minimize the reduction of sales. Our goal is to have the same sales data as we had in 2014.

Q. What are the main distinguishing features of consumers in Georgia and other regional countries when purchasing a car?

A. As Georgia strides towards its membership with the EU we are starting to observe more European-oriented trends among customers when purchasing a car. We can see more European car brands in the streets. In addition, people are becoming more cautious regarding fuel costs. As a result they have started preferring cars with smaller engines that mean less expenditure.

Despite the cultural and historical differences between our countries, customer preference is largely similar across borders. In the case of Toyota, it is definitely our QDR (quality, durability and reliability) which makes our cars so popular and in such high demand throughout the whole region.

The bestseller in Georgia in 2015 remains the same as in the previous year and is again the Toyota Land Cruiser Prado so loved by Georgian customers.

Q. In 2014 Toyota opened its second official representative office in Georgia. The President of Toyota Centre Tbilisi criticized the company’s decision, arguing that it would bring a sales reduction for both dealers (TCT and Toyota Centre Tegeta). How would you evaluate the step, one year on?

A. Toyota is one of the oldest officially-represented automotive brands on the Georgian market. We have been witnessing with much satisfaction and appreciation how the popularity of the brand has kept increasing along with the development of the Georgian economy. A large part of the credit for this success goes to Toyota Centre Tbilisi, which is our long-time esteemed partner. At the same time, Toyota’s ultimate goal is to ensure that all our existing and new customers receive the best product, service and overall ownership experience of the Toyota vehicles. In response to the growing customer base and total number of units in operation, the decision was made to expand Toyota’s network in Georgia and it definitely led to an increase of customer satisfaction in all aspects of our business.

Q. What is the company’s strategy of operation during the economic downturn in the region?

A. We are proud that Toyota continues to hold leading positions on all our markets. Thus our main objective remains the same: to offer more comfort to our clients, especially in after-sales service. In this sense, network development and the attraction of new customers by providing services in line with worldwide Toyota standards is our company’s main strategic aim.

Q. The GEL’s devaluation carried with it a negative impact for consumer solvency. How did you change your prices?

A. Bearing in mind Toyota’s main motto: “Customer First”, we always do our best to adjust to the changing market conditions for the benefit of our clients. Accordingly, this year we implemented a number of measures to negate the devaluation effect as much as possible and uphold overall customer satisfaction.