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Used Vehicles’ Ratio in Georgia’s Vehicle Fleet is 99%: Sector Suffers from Absence of Regulations

In the last period, almost all business sectors in Georgia are facing difficulties, including the automobile  imports  market. The situation in the sector aggravated in 2015 after the GEL exchange rate against USD extremely depreciated.

What is the current situation? Have the sales increased? In general, is it easy to make and develop the automobile imports business?

Union of Auto Importers of Georgia

Currently, the sector continues operation without regulations and this is a major problem, Misha Alkhanishvili, executive director for the union of automobile importers of Georgia, noted.

All countries have set regulations for imports, exploitation and technical inspection of vehicles, excluding Georgia. This sector remains unregulated in our country, Alkhanishvili said.

Namely, there are no requirements on what standards of emission is admitted in the vehicles imports process and which not. It is also unclear whether technical condition of the vehicle must be examined in the exploitation period or not. Moreover, customs tariffs remain unregulated and the existing legislation does not promote vehicle imports, he added.

«Customs tariffs are tailored to used vehicles. This creates certain problems. That’s why there are so many amortized vehicles in the country with polluted air, increased number of road accidents and so on», Alkhanishvili said.

Unregulated market and promotion of imports of old, used and amortized vehicles damage those companies that import new automobiles officially. Today, inflow of used vehicles exceeds imports of new automobiles several times and even tax tariffs, imports tariffs and exploitation regulations serve the secondary market interests, Alkhanishvili noted.

«Today used automobiles are the bestsellers. The imports statistics suggests that the picture is extremely different in Georgia compared to other civilized countries. New automobiles occupy 90% of imports in the developed countries, but we have different situation in Georgia. Used vehicles constitute 99% of the whole vehicles market», Alkhanishvili said.

Official automobile importers remain in quite grave situation. Other countries of our scales  annually import 50 000 new automobiles, while in Georgia this figure only makes up 3-5 thousands. All other imported vehicles are used ones, he added.

«if the country imported 120 new vehicles this year against 100 ones of the previous year, naturally, the statistics seem to be growing, but this is not sufficient and normal figure», Alkhanishvili said.

The Union and its member leading automobile importers have developed their own visions and concept and submitted them to the Business Ombudsman. He pledged to take into account our position, Alkhanishvili concluded.

Toyota Center Tegeta

Toyota Center Tegeta is content with the current market realities. No significant upturn was recorded this year compared to 2015. The current year started a little sluggishly, but now the situation goes smarter, the company commercial director Gega Metepshishvili said.

«This is ordinary case in business. We never consider achieved result satisfactory», Metepshishvili said.

This year Toyota introduced a new model of RAV4. Automobiles of 20 000-40 000 USD price category are the bestsellers in Georgia. RAV4 and PRADO belong to this category and its minimum price makes up 40 040 USD.

As to problems, all businesses have them and the automobile imports business cannot be exception. Consequently, the union of automobile importers, which was founded several months ago, will submit our initiatives to the Government. The union will also take part in all  processes related to road traffic organization and improvement. This strategy will attract more new automobiles to Georgia and the prices will also go down, he said.

It will be excellent if the government promotes imports of new automobiles and electric and hybrid vehicles. Moreover, aged and used vehicles imports should be narrowed, but not forbidden, Metepshishvili noted.

“Everybody should be able to buy desirable automobiles, including right-steering and retro vehicles, but corresponding taxation regime should be applied. The country follows certain strategy and vision about the vehicle fleet development. It is necessary that imports taxes meet long-term strategies. We are developing our proposals. We have already met with the government officials and we will hold official presentation of all these initiatives in the near future”, Metepshishvili said.

Importers will also participate in revision of state tender system, he added.

State tenders should become more competitive and the government should earn higher revenues. Consequently, not only prices will determine state tender results in terms of  sales of automobiles and equipment, but  long-term exploitation costs and revenues from post-exploitation sales will be also envisioned in the decision-making process, he noted.

“In the procurement process accents should be made on not one-time sum, but total costs of exploitation and ownership”, Metepshishvili said.

Tegeta Premium Vehicles

PORSCHE sales are stable, because we have imported new models. Moreover, we have set 20% discount for MAZDA vehicles and boosted the sales in this way. All-terrain makes are the bestsellers,  Ketevan Khuntsaria, commercial director for Tegeta Premium Vehicles (official distributor of PORSCHE and MAZDA makes) noted.

Caucasus Auto Imports

In the last period automobile prices have declined because of excessive supply and lower demand. The excessive supply was also driven postponement of prohibiting the  registration of right-steering vehicles, Caucasus Auto Imports head Giorgi Surguladze noted.

“Dealers have imported right-steering automobiles to create reserves and then sell them at higher prices. Those who previously were importing 10 vehicles, now import 50 ones and currently the market is oversaturated”, Giorgi Surguladze noted.

Moreover, dealers make advance orders and automobiles arrive in Georgia after several months, when the demand falls. The demand declines because of seasonal factors too. In general, the market is smartening, Surguladze said.