Azeris Not Buying Cars in Georgia Anymore

Saturday morning. Endless rows of thousands of vehicles. Their polished surfaces reflect the March sun rays.

Despite the abundance of vehicles, there is an unusual calmness here-just a few people are walking around, stopping from time to time to look at different cars. This is the Rustavi car market, the largest car market in the South Caucasus. Not too long ago, there wasn’t enough room to swing a cat here, but everything has changed now.

‘For sale. Price–US$7 900. Call 577…’

‘Motor 2.5. Price negotiable. Call 571…’

Dima sprays a liquid on a black ‘Toyota Prado’ and rubs it dry with a cloth.

The car is shining bright like a new dime.

‘The situation is such here that not only the salespeople but the clients, as well, are reluctant to stand around doing nothing. Take a look at this car, no car could be compared to it…but I have been trying to sell it for almost a year.’

Dima and his colleagues say that along with the depreciation of the Lari and reduced purchasing capacity, the main reason for a decrease in trade is that Azeri clients have left the Georgian car market.

Starting in 2014, with the aim to reduce car emissions, Azerbaijan introduced Euro-4 environmental standard, prohibiting the import of vehicles that are over 10 years old. The auto industry is among Georgia’s top three leading exporting industries. Until now, most of the car re-exports went to Azerbaijan. According to 2016 data, provided by the National Statistics Office of Georgia, car re-export has sharply dropped: only 24 cars were re-exported from Georgia to Azerbaijan in January 2016. Comparatively, 671 cars were re-exported from Georgia to Azerbaijan in January 2015. Georgia’s revenues from car re-exports to Azerbaijan amounted to US $13.7 million in January 2015. In January 2016, the revenues from car re-exports from Georgia to Azerbaijan dropped to US $577 thousand.

‘Azerbaijani clients practically do not come here. We mainly worked on selling to them. A week would not pass without selling a car. Azeris do buy cars now, but they prefer brand new and more costly ones. Personally, I have not enough money to work with expensive cars,’ – says Elguja, a car dealer.

Experts also confirm, that one of the most profitable business areas is at risk:

‘Georgia’s favorable and attractive geopolitical location is one of the reasons why this business developed in Georgia: cars that were imported from western countries were distributed to the neighboring countries-I mean, Azerbaijan, Armenia and the republics of Central Asia. Re-exports have stopped due to circumstances beyond Georgia’s control. It’s neither the National Movement’s nor the present government’s fault. Re-exports have stopped due to the restrictions, introduced in neighboring countries. It first started with Kazakhstan, which until 2011, imported about 25,000 cars from Georgia. After Kazakhstan joined the Eurasian Customs Union, we lost the country’s market,’ says Shalva Ogbaidze, Chairman of the Georgian National Automobile Federation (GAF).

The ongoing changes in neighboring countries cause serious problems to those engaged in the Georgian auto industry. To cap it all off, there will be legislative changes in Georgia, as well. Starting in 2017, the country will ban registration of right-hand drive vehicles (this restriction does not apply to the vehicles already imported into the country). In addition to this, regulations will be toughened and customs clearance costs (for certain categories of vehicles) will be increased. In view of all these nuances, people, who are engaged in small business in this branch, are going to face big challenges.

Leaving home at 6 a.m. each weekend has become part and parcel of 23-year-old Nick’s life. It is still dark outside. Nick starts the car, warms the engine up and gets ready to leave for Rustavi car market. His car shines as perfectly, it is washed and cleaned. That’s how it should be. Three years ago, Nick decided it was high time to make his own money, so he borrowed money from a friend and started importing low-budget cars. At first, things went smoothly, but now he has debts.

‘Azerbaijanis made up half of our clients, and, among other things, they paid pretty well. As for our people, they have no money. They are needy people. Now the right-hand drive cars will be banned. I’ve just imported such kind of a vehicle, and I am trying to sell it at the car market in vain-people do not even look at it. The clearance period expired and I have had to re-register it. To put it shortly, I have gotten myself into a hard place.’

Published 11.03.2016