Armenia Replaces Azerbaijan for Georgian Auto Dealers 

Armenia Replaces Azerbaijan for Georgian Auto Dealers 

Armenia Replaces Azerbaijan for Georgian Auto Dealers 

The FINANCIAL -- Georgian auto dealers re-exported a total of 26,712 vehicles in the first half of 2014, down from 31,249 from the same period of the previous year. This year Georgia lost the market of Azerbaijan, which has switched to the Euro 4 vehicle emission standard. Dealers were lucky to increase export to Armenia. However, after Armenia joins the Eurasian Economic Union in 2015, local car dealers are likely to lose this market too.

Georgia imported 45,759 vehicles during the first half of 2014, worth USD 331,740,900 overall. The number is 15% more than in the prior-year period, according to GeoStat. The share is equal to that of the reduced re-export, which according to auto dealers has been left unsold on the market.

Japan with 18,142 units (worth USD 149,217,300), the USA with 11,012 units (worth USD 89,189,400), and Germany with 10,285 units (worth USD 47,812,800) make up the list of the top countries from which Georgia imports cars.

Re-export has dropped from the 31,249 units of the last year to 26,712, or by 15%. With 7,915 vehicles, or 40%, Azerbaijan tops the list of the countries to which re-exports from Georgia have slumped during the first half of 2014 in comparison to the same period of the previous year.

Georgian auto dealers have lost their main market for re-export due to the recently-established Euro 4 standard in Azerbaijan. Only 11,642 units have been re-exported to Azerbaijan this year, while the number amounted to 19,557 last year. Azerbaijan is followed by the UAE, Russia, Iraq, Panama, Mongolia, Turkey, Kazakhstan, Kirgizstan, Finland, Uzbekistan, Syria, Belarus, and Greece, in terms of countries to which re-export has declined in the current year.

In April, Azerbaijan adopted the Euro 4 standard that prohibits cars made before 2005 on its territory. The restriction specifically concerns the import of cars there. Georgia used to be one of the key importers of cars to Azerbaijan.

Currently, Armenia constitutes the top destination for Georgian auto dealers. With 13,016 units, worth USD 71,147,400, Armenia has streaked ahead, leaving behind Azerbaijan which was the number one re-exporter for Georgians for a long time. This year re-export to Armenia has increased by 45%. By increased volume of re-exported vehicles Armenia is followed by Belgium, Iran, Turkmenistan, Tajikistan, the USA, Rwanda and Ukraine.

“Around 200 private and company car dealers in Georgia will see serious losses, believes Shalva Ogbaidze, car market analyst. “The local market is already saturated and there is no room for newcomers. Those who depend solely on the Armenian market face a serious challenge,” Ogbaidze explained.

Today, 70 percent of the car import in Armenia consists of Georgian re-exports, while only 5 percent are Russian exports. Once the Eurasian Union enters into effect this balance will be changed in favour of Russia. The Armenian consumer will be the obvious loser,” he added.

According to Ogbaidze, Russia will try to sell brand new cars which cost much more than second-hand ones. “For example, the cheapest Russian car brand Kalina costs USD 11,000-12,000 while some second-hand Mercedes models are available at USD 2,000-3,000 in Georgia. Russian second-hand car dealers sell this same model for USD 6,000-7,000. Accordingly, the Armenian middle class prefers to buy their cars in Georgia,” said Ogbaidze.

According to Armenian Prime Minister Hovik Abrahamian, a treaty on Armenia’s accession to the EEU will be signed in late October.

Contrary to second-hand car dealers, the current year has been successful for AKA Mercedes-Benz Georgia. The company realized 65 units of vehicles during the first six months of 2014. The number reached 86 units during the first seven months of the current year. The figure was 45 and 60 units during the first six and seven months of the prior year sequentially.

“Mercedes S class has been the bestselling model during the first six months of 2014. It made up 28% of the total sales amount. The price sits at around EUR 110,000,” Lasha Lomidze, Sales Manager at AKA Mercedes-Benz Georgia, told The FINANCIAL.

There was no sales reduction in 2014 at Iberia Business Group. “Sales of vehicles have not changed this year in comparison with the previous year,” said Ia Modebadze, Marketing Manager at Iberia Business Group. 

Iberia Business Group (IBG) is the largest auto holding on the Georgia automobile market. IBG includes sales of new vehicles, as well as auto servicing, spare parts, lubricants and tires. IBG executes the import and sale of new vehicles, as well as offering their customers the vehicle depreciation and maintenance of all types of services.

IBG is an official representative of Volkswagen, Audi, Skoda Auto, Kia Motors, Renault, Mitsubishi Motors and Peugeot in Georgia.

Bestselling models include: the Kia Sportage, average price USD 21,900 and Kia Rio - USD 13,200. A new Mitsubishi Outlander, worth USD 27,200, and L200, worth USD 25,000, are the most popular cars at Mitsubishi Motors. Skoda Rapid, at USD 16,000, and Skoda Octavia are the bestselling vehicles at Skoda Auto. Volkswagen Tiguan, together with Volkswagen CC, are the most in demand models of car at Volkswagen. The Audi Q7 and Audi A4 top the sales of the Audi centre in Tbilisi.

Hyundai Auto Georgia sold 203 units in the first half of 2014, down from the 346 from the same period of the previous year.

“The Hyundai ix35 and Hyundai Elantra have been the bestselling cars of the current year. The prices for each start from USD 25,400 and USD 16,300 respectively,” said Mariam Giorgobiani, Sales Manager of Hyundai Auto Georgia.

Hyundai Auto Georgia will soon bring exclusive models to the Georgian market: the brand new and totally different Sonata and Grand Santa Fe.

The representatives of brand new car sales points think that it is important for Georgia to switch to a Euro emission standard for vehicles. 

“I think that the implementation of a Euro emission standard in Georgia is necessary and should be done immediately. In the event of the implementation of a Euro emission standard in Georgia we expect that the demand for new cars will increase. At the same time, the improvement in the environment and the fact that we will not be breathing polluted air anymore, is also of huge importance,” said Lomidze, AKA Mercedes-Benz.

Like Lomidze, Giorgobiani of Hyundai Auto Georgia also thinks that a Euro emission standard should be implemented in Georgia. After its implementation the demand for new vehicles will increase.