TBC Capital || Re-export Tendencies Remain Strong in Georgia’s Automotive Industry
The sector is stable and primed for development, according to a recent analysis by TBC Capital.
In a recent analysis, TBC Capital found Georgia’s automotive industry continued to expand mainly on the back of foreign markets.
The study provides a review of the entire sector, from purchasing trends to Georgia’s continued role as a re-export hub for the region.
TBC Capital Junior Analyst Nika Kutchava noted that the indicators studied during the review revealed the sector is developing along predictable lines, which can be good for the industry.
For instance, the report found that despite a small drop in the number of vehicles imported in the first nine months of 2024, re-ex-ports increased by 11 percent.
“[This trend] adds a lot of stability because a lot of people in Georgia are in the business of importing automobiles and then re-ex-porting them,” Kutchava explained.
Other major findings included stable growth of cars in the country: 4.9% increase in the domestic fleet in the first nine months of last year, driven by light vehicle purchases. The data also indicates a jump in electric vehicle sales.
“The fleet is growing each year, which shows that it’s growing with the GDP,” he said. “We’re expecting to have more cars per 1000 individuals. Also, the average age is expected to decline.”
The review highlights the decrease in car imports, from $2.863 billion in the first three quarters of 2023 to $2.806 billion in the same period last year. Kutchava explained that the dip was largely anticipated.
“In the first nine months of 2024, imports declined. However, it’s not really concerning because in 2023, the base was high… because in 2023, there was a pretty high pent-up demand because of the pandemic and the geopolitical tensions in Georgia’s general vicinity,” he said.
Even with the year-on-year decrease of two percent, imports in the first nine months of 2024 were still more than double those of 2019 ($1.321 billion).
Georgia remains a strong re-export market for the region, with the shifts created by the Russian invasion of Ukraine strengthening in 2024, according to the findings.
Re-exports to Kyrgyzstan and Kazakhstan—Georgia’s largest markets—grew year-on-year: Kyrgyzstan’s share in sales jumped from 27 percent 48 percent while Kazakhstan’s increased from 26 percent to 31 percent. The increases cut into Azerbaijan’s share and sales to other countries: Azerbaijan fell from 21 percent to 13 percent and “other” dropped from 25 percent to 8 percent.
“The main takeaways are that these two countries are now the most important re-exporting markets for Georgia. Their share is growing…and became around 79 percent,” Kutchava said.
Internal Demand
The report tracked increased vehicles in the domestic market, from 1.75 million units in 2023 to 1.83 million in the first nine months of 2024. The growth was driven by light vehicles, which make up 82.1 percent of the fleet.
The overall figures hide a small drop in first-time registrations in the first nine months of 2024, compared to the same period in 2023: a six percent decrease from 117 to 110 thousand. The report notes, however, that this was largely anticipated due to the signifi-cant bump in registrations from 2022 (125) to 2023 (163).
More than half of the automotive fleet in Georgia is over 20 years old; however, the study found that the average age of the cars being registered is decreasing. The average age has dropped from a high of 10.6 years in 2021 to 7.9 years in the first nine months of 2024.
TBC Capital found a growing interest in electric vehicles in Georgia, with its share of first time registrations jumping from 1.2 percent (1,175 vehicles) in the first three quarters of 2023 to 3.2 percent in the same period in 2024. This follows an overall trend observed since 2021, from 315 total units recorded to 2,150 in 2023. The data from the first nine months of 2024, (2,900 units) shows demand remains strong.
Kutchava underscored the importance of the trend. “In past years, in the world, it has been this trend that the share of electric vehicles is growing. But in Georgia, it wasn’t really observed…Now that it has begun, it gives some hope that in the future it will become even better,” he said.