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Price on Cars and Car Service in Georgia to Rise by 15-20%

Due to the depreciation of the national currency, the car market has lost customers because the cost of cars increased. Car dealers talk of passivity of buyers from among the citizens of Georgia and try to balance the situation by re-export.
According to David Gogorishvili, the Executive Director of Iberia Business Group, when the exchange rate begins to fluctuate, it leads to consumer panic and people try not to waste money without special necessity because they do not know what will happen tomorrow.

“Consumers do not have a sense of stability and confidence in the future. As  prices are rising not only for cars, but for  essential commodities. While it is difficult to talk about the statistics of how reduced the number of car buyers as for complex reasons the market has declined. Moreover, the economy does not develop in those rates which would be desirable. Consequently, sales of cars in Georgia have decreased in 2014. If GEL devaluation continues, it will further lead to economy downturn, while the car  market is one of the most sensitive  to such changes. The car is a luxury, and accordingly, in the case of economic problems people will abandon costly and unnecessary purchases, “- he notes.

In his words, re-export  always helped to balance the lack of domestic demand, but because of the global trend of strengthening of the dollar, there are problems in this area as well.

Iberia Business Group was established in 1999 and represents in Georgia the interests of Volkswagen, Audi, Skoda Auto, Kia Motors, Renault, Mitsubishi Motors, and Peugeot.

Commercial Director  of Aka Mercedes Lasha Lomidze states  “Commersant” that price of their cars has not hiked  since they are purchased on the euro, in respect of which the Georgian national currency is relatively stable.

“Moreover, the products have become even a little cheaper. We do not feel the downward trend in consumer demand. This kind of fluctuations is mainly typical for  cheap cars, and minimally affect the premium segment, “- he notes.

He adds  that in 2014 sales grew by 30% compared with 2013.

“With regard to the prospects for 2015, it is difficult to make predictions, because it is too early. It is impossible to draw conclusions only on data for January. Although, I can say  that January 2015 proved to be more effective than January 2014. In general, we expect  sales growth by 10% in 2015 compared 2014. Overall, in the last 2 years we have had a very large growth and it will be difficult to  maintain it at this level, “- Lasha Lomidze believes.
Levan Gogsadze , Director of GT Group,  says  that the devaluation of GEL will have a minimal impact on sales, but in any case, those companies who have  income in the national currency will face difficulties when  buying  cars.

“First of all, services will become  more expensive, as well as spare parts and lubricants. All this will necessarily be reflected on the consumer. We are forced from 1 February to review the prices of all goods that are purchased in dollars. Since November, they went up by 15-20%. Naturally, this will lead to a decrease in demand, as the purchasing power of the population is falling. Such fluctuations  create problems  for all kinds of business, including automobile. As for re-export, in this area there are  no problems, “- he says.

According to Temur Ustiashvili, Director GT Motors, GEL devaluation had an  impact on prices, and accordingly, on consumption.

“The majority of the population have revenues in local currency, so buyers beware of taking car loans in dollars, respectively, the number of buyers reduces. While there is no particular danger, but if this continues, we will have to review the salaries of our employees. At the same time, I can say that the price of cars bought in the euro remained virtually unchanged, “- he points out.

GT Group operates in the market of agricultural machinery, GT Motors represents  in  Georgia the interests of the brands such as Ford, Land Rover and Suzuki.