BUSINESS
Why were car prices reduced in Georgia
30 June, 2014
Georgian auto business is under the threat of collapse. There’s an unusual lack of people at Rustavi Automarket, yet despite the forced reduction of prices recently, many cars have yet to find their owners. Car dealers think that a large part of the problem was caused by standards recently introduced by Azerbaijan, which prohibit import of cars manufactured before 2005 into the country. They also say that they were hit the hardest by this restriction, since 70% of their cars were
sold to Azerbaijan. Elguja Jamagidze, founder of “Robani Motors”, says that car dealers now have to sell the cars at prices below their net cost.
The Price of some cars has dropped by as much as $4000. According to dealers, prices have decreased by 30% on average. Despite such a sharp decrease, Gia Shekiladze still cannot sell his cars. Dealers explain that Georgians only comprise 10% of their market. By Shekiladze’s estimate, if the trend continues, many of the currently active 32,000 car dealers will be out of business. So far they are demanding from the Georgian government to work things out with Azerbaijan and find the solution.
The problem is exacerbated by a market tax, which the dealers think is too high. They ask for certain leniency in this regard as well. On top of that, official statistics report that car import has decreased by 10% in the last year.
Prices are dropping, customers are nowhere to be seen, dealers grimly await dissolution of their businesses – such a problem isn’t easy to solve.

By Lekso Nabakhteveli

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