The FINANCIAL — The last days of the new Russian-Georgian war have been devastating for Georgia. It was a big strike for the auto business in Georgia, previously in the lead in the Caucasus region. The sales of the cars decreased catastrophically and for many companies even came close to zero. Cash flows have dramatically decreased for car dealerships in Georgia.
Out of the different car dealerships in Georgia Toyota was one of the best according to last year’s figures. It was the Golden Brand winner in Georgia in 2007. The sales of Toyota cars increased fourfold over the last two years, before the war started.
From the first days of the occupation of Georgia sales at the Toyota dealership started to go down. During the conflict Toyota didn’t sell any units, a company representative said.
Iberia Business Group sold at least 120 cars during the conflict in Georgia. About 90 cars were corporate and 30 cars went to private clients. Approximately 55% were Skoda 15% Kia 12% Mitsubishi and 18% other brands (Renault, Peugeot, VW, Audi). Total value of the cars sold came to approximately USD 1,500,000.
The Peugeot Centre in Tbilisi sold 11 cars in August. But these agreements were negotiated before the conflict had occurred. 307 (6 units), 207 (1 unit) and 206 Sedans (6 units) were sold. If we take into account the current situation, this was quite a good result for the company, according to the Marketing Department of Peugeot. “For the Opel dealership in Georgia, business activities were close to zero during the conflict,” Ani Kutubidze-M.D.
The same results went for the Mercedes-Benz dealership. There were no cars sold by the company during the war, a company representative told The FINANCIAL.
The imports have stopped for most companies. Toyota is importing vehicles from Japan as the official dealer of Toyota in Georgia. As the security of the cargo can’t be fully ensured on Georgian territory, all the shipments have stopped for the time being. “Now it is absolutely impossible to take the risk to ship them, we are not encouraging them to enter Georgia yet,” said Tinatin Revazishvili, Marketing Department.
Iberia Business Group is importing from France, Japan, Germany, South Korea, the Czech Republic and other countries.
“We must admit that temporarily due to the military conflict happening in the middle of Georgia the cars cannot undergo transit from west to east Georgia, Tbilisi. We have changed the means of transportation of the cars; accordingly we are doing shipping through Turkey, loading the cars on to trucks and from there sending them to Tbilisi. Sadly our products have stopped being transported to Bulgaria, Turkey and Batumi (a city in west Georgia) and are waiting for this military conflict to stabilize. Due to the Russian military forces scattered around Georgia neither we nor the Georgian Government can provide safe transportation through these regions. Roads connecting the east and west of Georgia are currently blocked,” told Levan Aroshidze, Marketing Department of Iberia Business Group.
As it seems Opel was much luckier to get their trailers back sooner than their Azerbaijani colleagues. “During transportation the Azeri Chevrolet dealership lost 8 of its cars. The trailer was destroyed in the process of transit,” said Tamar Bodokia, Opel, Marketing Department. “Opel Georgia is still having problems with its cargo. Some of their containers holding Cadillacs and scooters are stuck at Batumi Port.”
The risks connected with transportation are so high that Peugeot has stopped importing autos from France. Originally cars were transported through Turkey to Poti Port. This was and is the cheapest way of transportation for the company.
Some companies have started thinking about alternative ways for transporting their cargo.
“An alternative way for the cars to reach Tbilisi is through Armenia, however according to the recently achieved international diplomatic agreement, we are absolutely sure that we will be able to import our cars using the road that we previosuly did, considering the fact that this is the faster and cheaper way,” Levan Aroshidze, Iberia Business Group M.D.
For Peugeot there are no alternative ways of transporting the cars, as the cost would be too high. If the troops stay and if the roads stay closed, there will be no sales and no import. Even though there still exists another way through Azerbaijan – the red bridge,” said Tinatin Revazishvili, Toyota Georgia Marketing Department.
Despite the war Georgian companies still have resources for their customers and there is no deficit of autos. Today Peugeot Centre Tbilisi has reserves of every model. According to Toyota and Opel they don’t have any problems with car reserves.
“Luckily we have a stock in Tbilisi and can yet satisfy the customers,” Tinatin Revazishvili, Toyota Georgia Marketing Department.
For some Georgian Auto Companies it is uncertain whether or not they will be able to continue working in Georgia. Whilst the presence of Russian troops remains it is unclear for the Mercedes-Benz dealership whether they will be able to operate in Georgia.
“If the Russian troops don’t fall back and if the situation stays like this, it will be very hard to keep operating physically,” said Ani Kutubidze, Peugeot Centre, Marketing Department.
For Iberia Business Group there is no doubt about continuing business in Georgia.
According to Toyota Georgia’s M.D they are not going to close down their business. “We are open every day and we work fulltime. We are not having any second thoughts on the subject. We do hope for a better economic future though.”
The Opel dealership is working fulltime and are not planning to leave the Georgian market.
One thing is obvious, if the situation does not stabilize this will cause serious economic drawbacks for businesses. Everything depends on how long the economic destruction process will continue. Consequently Auto dealerships will have to think about finding ways of fighting for their business interests.
Written by Levan Lomtadze
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