Car Re-export Biz Slowly Dying, While Unemployment is Growing
02 October, 2014
Car Re-export Biz Slowly Dying, While Unemployment is Growing
From the 1st of September, the customs duty was lifted on cars imported from the EU, in accordance with the Association Agreement and Deep and Comprehensive Free Trade Agreement. Thus, an importer of cars from the EU will be able to save 150-300 GEL per car. Due to the fact that most of the price of customs clearance is covered by excise tax rather than customs duty, importers think that lifting such a meager tax will not have any noticeable
effect on the car business, which is in a dire condition at the moment. In order for an importer to be exempted from customs duty, he has to hold a certificate for every single car brought through the border that proves its location of origin.


It has been six months since the ban on exporting cars manufactured before 2005 from Georgia to Azerbaijan, which put this sector in a very unpleasant situation. The largest percentage of cars re-exported from Georgia went to its eastern neighbor. A few months ago, “Kviris Palitra” predicted that the re-export of cars to Armenia would cease as well, when it becomes a member of the Eurasian Customs Union. In 2011, this was precisely the reason why the Kazakh market was closed to Georgia. Just two years before that, in 2009, more than 20 thousand cars were exported to Kazakhstan from here. Due to the fact that Armenia’s membership in the Eurasian Union became delayed for an indefinite term, exporters of used cars set their hopes on this market, but only a small share of them goes through. Cars sent to Armenia represent only 26 percent of Georgian car re-export. Importers left without an outlet for their goods are spending time dealing with resulting financial problems and asking for help from the government.
TEMUR BAGHDADASHVILI, car importer: “I’ve been in this business for 15 years and yet I can’t remember a time when conditions for us were as bad as they are now. Each weekend, only an average of ten cars gets sold. More expensive cars are having an even harder time when it comes to sales, and we are forced to cut down their prices severely. For example, a car that used to cost from $15,000 to $20,000, now can be sold for $11,000 – far cheaper than it cost the importer to obtain the car and bring it here. The closing of the Azerbaijani car market for us was a heavy hit on our sales, but the government isn’t doing anything to give us a chance to overcome this crisis, even though 25 to 30 thousand Georgians are involved in this business and its total turnover is about a billion dollars.
Due to us no longer being able to sell cars, all importers have exceeded the 45-day customs clearance deadline and now have to pay fines ranging from 300 to 1,000 GEL. Not so long ago we could barely register a car at a terminal before it got sold. Now I stand at the market without a single customer in sight, and it’s been like this since the 9th of May. Importing a car cost me $1,300 and I now have to pay $500 more for both exceeding the clearance deadline and standing around at the market. Even if I manage to sell this car, I am bound to lose at least $3,000, and this is only in case I get lucky and find a customer soon. Otherwise, I might lose even more money.
Everyone involved in this business has gone bankrupt. I simply have to sell this car in 45 days so that I won’t have to pay the customs tax. Yet I can’t sell it, so I am forced to reduce its price to avoid sanctions. People are seeking investors abroad and give local investors no attention… Just give us an opportunity to do our thing, damn it. The only ones lining their pockets with gold here are the market’s owners. When our business develops and takes on a more civilized shape, it would be possible to sell cars by installment, without banks. And our relationship with banks will become far simpler. In such conditions, our car park will become fluid and slowly renewed instead of just sitting here like an inert pile of junk.”
IAGO NATSVLISHVILI, car importer: “Due to a decrease in our sales, a lot of car export outlets in Europe became closed. What still gets sent here is of low quality and extremely cheap, to be sold in Armenia at a giveaway price.
Long story short, we’ve been limited in every possible way – the government is fleecing us with their obligatory customs clearance, keeping cars at the market and terminals for months is becoming expensive… If you noticed, the amount of cars parked in the streets with “For sale” notes on their windshields has increased. Our local customers, due to their limited purchasing ability, have mainly switched to right-hand drive cars from Japan and the US, which cost from $2,000 to $3,000. Driving such a car in our streets isn’t safe, but our customers feel that cheapness compensates for this.
Thus, the import of used cars from Europe is slowly dying, while our unemployment lines are quickly growing.”

Print
Other Stories
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
Mziuri Park in Tbilisi to be renovated soon
It was the dream of prominent Georgian writer Nodar Dumbadze that when the original Mziuri park was constructed and opened in 1892 that it should be a park for children,
Winemakers to produce Kvanchkara in its place of origin - Racha
Khvanchakara is a semi-sweet Georgian red wine which originates from Racha, in the western part of Georgia. Kvanchkara is made of two types of grape Mujuretuli and Aleksandrouli.
The level of Georgian wine and Chacha exported has increased
The National Wine Agency of Georgia has recently published statistical information about the level of Georgian wine and Chacha exported between January and July, 2018.
New fire engines to be Manufactured in Georgia
The Acting Head of the Emergency Management Agency Shalva Khutsishvili said that the old Zili fire engines (which were made in the USSR) will be phased out and replaced with new ones, manufactured in Georgia.
Georgia witnesses a record number of tourists
The Georgian National Tourism Administration publishes statistical information about international visits to Georgia.
Canadian businessman plans to build a hotel in Bakhmaro
Canadian businessman Vadim Malishev plans to build a hotel in Bakhmaro resort, Guria, in the western part of Georgia.
Coffee Factory will open in Tbilisi in October
The first coffee factory (which will be located on the Kakheti highway) in Tbilisi will open in October.
Places in Georgia where real estate is the most expensive
The real estate market in Georgia is growing annually. In Tbilisi as well as other regions of Georgia new developments are increasingly taking place.
How much does a vacation cost in Tbilisi?
It is the middle of summer and those who have not yet taken a vacation are looking for an appropriate place for sure!
The price for extreme sports in Georgia
Georgia offers a variety of options to extreme sport lovers.
The number of Georgians who own property abroad increases
The number of foreign properties owned by Georgians is increasing.
How much does Taxi cost in Tbilisi?
Stories how Taxi drivers try to deceive passengers and charge them with more money than they should pay are known for everybody all over the world.
What are the highest paid areas in Georgia
According to the data collected by the National Statistics Office of Georgia in the first quarter of 2018 the highest paid jobs in Georgia are found in the financial and insurance fields.
PHOTO OF THE DAY
Exchange Rates
GEL Exchange Rate
Convertor
24.09.2018
25.09.2018
USD
1
USD
2.6216
2.6216
EUR
1
EUR
3.0854
3.0854
GBP
1
GBP
3.4584
3.4584
RUB
100
RUB
3.9340
3.9340
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
2.6216
EUR
1
EUR
3.0854
GBP
1
GBP
3.4584
RUB
100
RUB
3.9340