BAKU, Azerbaijan, March 29
Tamilla Mammadova – Trend:
Auto business sector turnover was down by 24 percent year-on-year to 2.9 billion lari ($868.9 million) in 2020 in Georgia, reflecting a 36 percent year-on-year reduction, Trend reports via the Georgian investment company Galt & Taggart.
Car parts and car service sectors in the country were relatively stable in 2020, despite the COVID-19 pandemic.
Georgia's formal auto business combines three major sub-sectors: 1) car trade, 2) car parts and 3) car servicing and repair.
"Taking into account large proportion of informal activity in the auto business sector, we estimate that formal sector accounts for 70 percent of total market size on average. Notably, the informal sector shrank in 2020 due to lockdowns," the report said.
According to company's estimates, informal auto business generated 1.7 billion lari ($509.3 million) turnover in 2019. Because of closed markets and limited re-exports in 2020, informal auto business dropped (-45 percent year-on-year) more than the formal sector (-24 percent year-on-year).
By being a regional hub for car trade, Georgia’s auto business sector earned 1.4 billion lari ($437 million) or 36 percent of total revenues in 2020.
"We estimate that gross profit earned from car re-exports averages 157 million lari ($47.04 million) annually," the report said.
Formal car trade generated 2.7 billion lari ($809 million) turnover in 2019, including informal sector this figure rises to 3.9 billion lari ($116.8 million).
"By our estimates, used car trade accounted for 38 percent of total car trade in formal activities, and overall used car trade (including informal) accounted for 58 percent of total in 2019," the report said.
On average, dealers earn 10 percent gross margin on used cars in Georgia. Margins vary according to the damage severity of imported car and related repair costs and can reach 15 percent or even 20 percent in some cases.
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