Eurasian Union Dumps Georgian-Armenian car trade
12 June, 2014
Eurasian Union Dumps Georgian-Armenian car trade
The Kremlin-initiated Eurasian Union is expected to give the Georgian-Armenian car trade a cold shoulder in favor of Russian cars. This will hit the Georgian car export and deprive the Armenian consumer of a cheaper alternative.

Although Georgia is not a car-producing country, according to the latest statistics, Georgia’s car export leads by roughly 21 percent. The secret lays in simplified customs procedures and lowered tariffs introduced with the reforms that began in 2004. Georgia has enjoyed a preferential trade
regime with neighboring countries like Armenia, Azerbaijan and Kazakhstan, which have found it cheaper to buy cars imported by Georgian car dealers [from Germany, Japan and the US].
For this reason the Georgian car re-export leaped from only 1 percent of the country’s exports in 2004 to roughly 24-25.5 percent in 2012-2013. But the upcoming Eurasian Union of Russia, Belarus and Kazakhstan and its unified customs space will likely deliver a powerful blow to this trend.
Georgia already lost the Kazakh market in 2011 when Kazakhstan joined the United Customs Union [a forerunner of the Eurasian Union] with Russia and Belarus. Kazakhstan led in the Georgian car re-export until 2009 (at around 20,000 cars). Armenia likely will be next.
On 29 May, Russia, Belarus and Kazakhstan signed a treaty to set up a common economic space which duplicates the EU model: removing customs barriers within its territory and building high barriers for import. Yerevan will join the Union tentatively in a month which means the free trade agreement between Georgia and Armenia will stumble over increased customs tariffs next year.
“The Armenian market will be lost forever after 2015,” Giorgi Glonti, sales manager at the car dealership Auto Strada Ltd, said. “Armenian traders have already stopped car orders. Not a single Armenian partner has shown up for a month and a half.”
Around 200 private and company car dealers in Georgia will see serious losses, Shalva Ogbaidze, a car market analyst, believes. “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.
Giorgi Tavadze, Commercial Director of Avto City, which relies on the Armenian market for 50 percent of its business, seems frustrated.
“The market has already halted and prices have dropped by 15-20 percent. The profit margin has gone from 700 USD to 100-200 USD… I now import 25 cars or less,” Tavadze said. He believes cars produced in Russia will take over the market.
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 favor of Russia. The Armenian consumer will be the obvious loser, sector pundits say.
According to Ogbaidze, Russia will try to sell brand new cars which cost much more than second-hand cars. “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… Armenian middle class prefers to buy their cars in Georgia,” Ogbaidze said.
Once the Eurasian Union enters into effect, the Armenian middle class can forget about their cheap option. The new customs space will charge four times more for imported second-hand cars. The customs clearance of an average Mercedes that costs USD 2,000–3,000 today at the Georgian-Armenian border will reach USD 14,000.
“The purchase power of an Armenian consumer is as low as that of a Georgian, they cannot afford expensive cars and both of us will suffer,” Ogbaidze concluded.

Related story:

Possible exemptions on car import in Armenia

Print
Other Stories
Korter: Reliable housing property data in Georgia
It's not a simple job to find fresh homes. But when you use the estate choice service Korter, everything becomes distinct.
Rent a car in Tbilisi – Parent.ge
Are you thinking of booking the best vehicles for your next trip at a very reasonable price? If yes, then this is one of the best decisions you can ever make for yourself.
Pleasant Sunday for the whole family – Renewed Sunday’s brunch at The Biltmore Tbilisi Hotel
Summer, the season of endless fun and vacations, has ended and Tbilisi has become a usually crowded city.
GEL devalues, officials show optimism though
Devaluation of the national currency has sent shockwaves among citizens in Georgia. Officials think that the trend will return to its normal frame, though.
ProCredit Bank’s 20 years of challenges and successes in Georgia and what it means to be a responsible bank
“The bank’s 20-year long presence in Georgia was marked by many challenges and success stories.
Comments on alarming GEL devaluation
The National Bank of Georgia set a new exchange rate, according to which, dollar price became GEL 2.9507 on Tuesday.
Euronews and Silknet sign an MOU to launch “Euronews Georgia”
Euronews and Silknet, Georgia’s leading telecommunications company, are announcing the signing of an MOU in view of launching Euronews Georgia, a news channel and digital platform aimed at a Georgian-speaking audience.
Green Diamond starts to hand over flats to owners as second stage of construction finishes
Second stage of construction of Green Diamond living apartments by MAQRO Construction has finished and process of hand over of flats to owners has started.
Georgian wine tasting in the US came off excellently
Georgian wine tasting in the main cities of the US, New York, Chicago, and Boston went off excellently.
The most wanted fruits from Georgia
The fruit exportation has decreased in Georgia. According to Geostat (National Statistics Office of Georgia), this year, up until May Georgia exported 25 939 300 USD worth of fruit – 6 771 300 USD less than in 2018.
Investment Plan for Europe – Additional EUR 800 million for SMEs as EIF and ProCredit double support for innovative companies
The European Investment Fund (EIF) and ProCredit Group are providing an additional EUR 800 million to innovative small and medium-sized companies (SMEs),
Everything of comfortable life in one space – Second part of construction of one of the largest apartment complexes finished in Tbilisi
Apartment in ecologically clean environment, thousands of square meters of green yard, swimming pools, places for various sports activities, treks for walking and running, commercial spaces – all these available in one space is not a fantasy.
Batumi awarded Europe's Leading Emerging Tourism Destination 2019
World Travel Awards Europe Gala Ceremony 2019 took place on the 8th of June in Madeira, Portugal.
Coca Cola to open new factory in Georgia, will hire female drivers
Coca Cola is opening new factory in Georgia in December.
World's best party supply company now on the Georgian market
The largest party supply store in Georgia - MyDay is launching as the official distributor of AMSCAN from 2019.
Live as a marketing tool and an unprecedented live stream launched by Livetag
Sharing information has become smoother and more versatile in today’s technological world. Recently, live streaming, an online streaming media has become especially popular.
Theme and program of Caspian Energy Forum Tbilisi – 2019 changed
“The 8th International Caspian Energy Forum Tbilisi – 2019, scheduled for June 21, will focus on the development of the Azerbaijan-Georgia relations in the field of economy and energy”,
Misunderstanding over Poti deep sea ports
There was misunderstanding around deep sea ports in Georgia – in Poti.
High demand for dollars or the investment decline – Why Georgian Lari depreciates
$1 equals GEL 2,7470 in the official rate set by the National Bank of Georgia (NBG).
PSP Group confirms negotiations regarding purchasing of GEO Hospitals
PSP Group confirms negotiations regarding purchasing of GEO Hospitals.
New life to be given to Dashbashi Canyon
Georgia’s Agency of Protected Areas is planning to give new life to Dashbashi Canyon in Tsalka (southeastern Georgia).
Who is constructing “Khadori 3” Hydropower Plant in Pankisi Gorge?
Clashes broke out in Pankisi Gorge, Georgia’s northeastern region between special forces and residents
Business Positive – Successful radio program from Radio Positive
Starting point of radio program Business Positive is to meet interesting people, communicate with them and deliver information that is interesting for the audience.
A factory of electric vehicles to be built in Kutaisi
Prime Minister Mamuka Bakhtadze stated that a factory of electric vehicles will be built in Kutaisi at the presentation of the Aigroup business group.
Qvevri-shaped hotel complex to be built in Telavi
A Qvevri-shaped hotel complex is scheduled to be built in the village of Shalauri in Telavi, Kakheti (east part of Georgia).
PHOTO OF THE DAY
GEL Exchange Rate
Convertor
08.12.2019
09.12.2019
USD
1
USD
2.9466
2.9466
EUR
1
EUR
3.2690
3.2690
GBP
1
GBP
3.8683
3.8683
RUB
100
RUB
4.6218
4.6218
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
USD
1
USD
2.9466
EUR
1
EUR
3.2690
GBP
1
GBP
3.8683
RUB
100
RUB
4.6218
December 2019
Mon Tue Wed Thu Fri Sat Sun
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31