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Georgia’s car market suffers from poor economic climate and EEU tariffs

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TBILISI, APRIL 8 2017 (The Conway Bulletin) — Tax increases on cars that are either more than 6-years-old or are right-hand drive, Eurasian Economic Union (EEU) tariffs and a regional economic downturn have combined to hit Georgia’s car market, once an important part of its economy.

Georgia became a hub for the import and export of used cars to the South Caucasus and Central Asia in the early 2000s, after the government simplified customs procedures and lowered tariffs. Kazakhstan, Azerbaijan and Armenia used to be the main importers of cars from Georgia. Nowadays, however, the once-booming used car market is shrivelling, limping through a painful decline.

Sales data from the Rustavi Auto market ‘Autopapa’, the biggest retailer of used cars in Georgia, which lies 25km south-east of Tbilisi, makes for grim reading. In 2013, almost 80,000 cars were exported. In 2016, around 16,000 were exported.

On a visit by a Conway Bulletin correspondent frustrated dealers were complaining that they were being driven out of business.

“I have been here since the opening of this market and it has never been this bad,” said Ioba. “I have 30 cars here. If the situation does not change, I will sell them and move on to another business.”

Others wistfully remembered a more prosperous age.

“I have around 15 cars now, but this business is just not working. Nobody wants old cars anymore. I will have to switch to new cars,” said Konstantin. “When the Kazakhs came here, not a single car went unsold. Those were golden times.”

The reference to Kazakhstan shows just how interdependent the economies of Central Asia and the South Caucasus are. The Kazakh economy is the biggest in the region but, like its neighbours, a downturn in the economy has pressured life- styles. Tariffs imposed by the EEU have also hurt the market. Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia are all EEU members.

Kakha Daushvili, executive director of the Association of Young Economist of Georgia said the EEU had helped undermined the car market but it wasn’t the only factor.

“This region was under serious crisis from 2014 up to present, I would say,” he said.

ENDS

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(News report from Issue No. 324, published on April 13 2017)

Georgia sees no threat to bumper exports from EEU

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TBILISI, APRIL 8 2017 (The Conway Bulletin) — The Russia-led Eurasian Economic Union (EEU) trade bloc has not damaged Georgia’s exports, Mariam Gabunia, head of the department for foreign policy at the Georgian economy ministry, told The Conway Bulletin in an interview.

Instead she said that Georgia was on course for a bumper year with exports rising strongly after a dip last year linked to tough economic conditions in Russia, Central Asia and the South Caucasus.

Some analysts have said that the EEU, which is essentially a trade bloc including Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan, would hurt those who didn’t sign up — including Georgia. Ms Gabunia, though, waived aside this notion.

“In general, we do not see any negative impact on Georgia’s trade with regard to the EEU,” she said. “We are part of the CIS free trade agreement and Belarus and Kyrgyzstan are part of it. On top of that we have bilateral FTA (free trade agreements) with Russia, Armenia and Kazakhstan.”

Ms Gabunia’s comments are important because it is one of the first times that a senior official from a government outside the EEU has commented on whether the bloc has hit regional trade. Many businesses within the bloc have been complaining that the extra bureaucracy and the bias towards the larger members have created problems.

Georgia is, to a large extent, still reliant on trade with its former Soviet neighbours. One of the biggest boosts to its economy over the past few years was repairing relations with Russia. Last year it was Georgia’s biggest export market with $200m of sales.

And Ms Gabunia said that bilateral agreements made in the 1990s underpinned Georgia’s trade within the former Soviet Union, taking precedence over EEU rules.

“According to the legislation of the EEU the FTA that were concluded before the creation of the EEU will stay in force. and we had FTA with all these countries before the EEU was created,” she said.

This year has started strongly, mainly because of much improved macroeconomic conditions in Georgia and the rest of the region. Ms Gabunia said that trade relations with Russia had improved along with political relations.

“As far as concerns the other EEU members, the situation is improving,” she said.

“Exports to Belarus increased by 61% in the first two months of 2017, for example.”

According to Geostat, Georgia’s biggest exports are copper ore, ferroalloys, wine, medicines and cars.

ENDS

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(News report from Issue No. 324, published on April 13 2017)

Uzbekistan to build tire plant

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APRIL 2 2017 (The Conway Bulletin) — Uzbekistan will begin construction of a $214m tire production plant near Tashkent in August, media reported quoting the state’s chemical company Uzkimyosanoat. The development of the factory is part of scheme by Pres. Shavkat Mirziyoyev to expand Uzbekistan’s industrial base.

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(News report from Issue No. 323, published on April 6 2017)

Carmaker in Kazakhstan starts exports to China

FEB. 1 2017 (The Conway Bulletin) — Russian carmaker AvtoVAZ has started exporting its Lada 4×4 to China from its factory in Kazakhstan, the life.ru website reported quoting an official at the Asia Auto factory in the east Kazakh city of Ust-Kamenogorsk. Asia Auto is one of the biggest car manufacturers in Kazakhstan. The Kazakh car making sector has been hard hit by the economic downturn.

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(News report from Issue No. 315, published on Feb. 3 2017)

Enterprise signs car rental franchise deal with Georgia and Armenia

JAN. 26 2017 (The Conway Bulletin) — US car rental company Enterprise, which owns the Enterprise, Alamo and National brands, said it had made a franchise deal with Yerevan- based TravelCar. The deal will expand the brands to Armenia and also to neighbouring Georgia. The deal is part of a global drive by Enterprise to spread its business across the Middle East and Asia.

ENDS

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(News report from Issue No. 314, published on Jan. 27 2017)f

 

Kazakh car manufacturing slides

ALMATY, JAN. 18 2017 (The Conway Bulletin) — Car manufacturing in Kazakhstan fell by around a third in 2016 to 8,397, dragged down by a stagnant economy.

The disappointing data, released by the Kazakh state statistics committee, is even more stark when laid alongside earlier, pre-economic downturn aspirations. In 2013, with oil prices hovering above $100/barrel, double today’s prices, and with domestic consumer demand buoyant, foreign carmakers were lining up to cut deals with local producers to get their models into the market.

Back then, industry officials were predicting that Kazakhstan would produce over 50,000 cars in 2014.

The economic downturn been so devastating on Kazakhstan’s industrial base, that the government has said that it will step in and subsidise the car industry.

Kazakhstan’s Auto Business Association said that official car dealers’ sales sharply dropped in 2016 to 46,712 cars from 97,469 in 2015.

ENDS

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(News report from Issue No. 313, published on Jan. 20 2017)

Kyrgyzstan buys buses from Russia

DEC. 22 2016 (The Conway Bulletin) — Russian truck and bus producer GAZ said that it sold 30 city buses to Kyrgyzstan for 2.7m euro. It said that the buses were destined for Osh and that they were designed to carry up to 104 passengers.

ENDS

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(News report from Issue No. 310, published on Dec. 23 2016)f

 

Kazakh mayor to bring London cabs

NOV. 23 2016 (The Conway Bulletin) — Gabidulla Abdrakhimov, mayor of Shymkent in southern Kazakhstan, flew to London to meet British business representatives and to float the idea of bringing the iconic London cabs to his city. Gipsy cabs are commonplace in Kazakhstan, although taxi companies and ride-hailing apps have gained an increasing share of the market in recent years. In 2012, Magnesium Bronze’s London cabs became the only official taxi brand in Baku, Azerbaijan.

ENDS

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(News report from Issue No. 306, published on Nov. 25 2016)

E-space plans to develop electric car market in Georgia

TBILISI, NOV. 4 2016 (The Conway Bulletin) — Two charging points for electric cars have been installed in Tbilisi, media reported, the first move in a push to promote the sector.

E-space, a Georgian company, plans to install 25 more chargers across the city by the end of the year, then 70 more by the end of 2017, followed by chargers along motorways.

Sulkhan Gvalia, former deputy CEO of Bank of Georgia and now E-space CEO, said the sector was ripe for development in Georgia.

“The problem in Georgia is that there is no infrastructure. So that is why we started with that,” he told The Conway Bulletin.

Recharging an electric car will be free until the end of 2017. The Tbilisi city government has said it will pay for the power supply bills at the first two charging points. For the next charging points, E-space wants to sign agreements with shops to host and pay for the power. The shops will benefit from the extra trade generated by drivers stopping to re-charge.

So far, there are 50 electric cars registered in Tbilisi but Nata Kasradze, E-space’s chief product development officer, said sales will rise.

“The visibility of the chargers will change the mentality of people,” she said. “We haven’t imported a single car yet but we already have about 30 requests from people who want to buy a car.”

E-space has five founders and is self-funded. The founders said they had developed a three-point plan for its business. To develop the infrastructure, then open a showroom to sell cars, scooters and motorcycles and finally develop a service centre.

On the streets of Tbilisi not everybody was convinced, though.

Dato, 32, said Georgians with money want to flaunt their wealth by buying a BMW or Mercedes .

“Electric cars are still very expensive,” he said. “Georgians who can afford to spend this amount of money will not spend it on an electric cars which still do not represent wealth.” Gocha, a businessman, agreed.

“This market is for the middle class, but it has to be well marketed so that people can see the benefit coming from it. I do not think that Georgians are ready for that”

ENDS

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(News report from Issue No. 304, published on Nov. 11 2016)

Kazakh carmaker revives production

NOV. 4 2016 (The Conway Bulletin) — Despite a 29% fall in revenues, Kazakhstan-based carmaker AziaAvto turned a profit of 3b tenge ($8m) in the first nine months of 2016, compared to a loss of 13.4b tenge in the same period last year. In a statement, the company said that despite the slump in the market, AziaAvto has managed to contain costs and revive production. AziaAvto’s plant in eastern Kazakhstan produces cars for Lada, Skoda, Chevrolet and KIA.

ENDS

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(News report from Issue No. 304, published on Nov. 11 2016)