WHO MADE 150 THOUSAND CARS DISAPPEAR

EKA LOMIDZE

For the West, post-Soviet countries represent realisation market of second-hand foreign cars, as there is Russian auto park in these countries. It is renewed by foreign cars.

Thus, the problem of contraband, second-hand cars exists, mainly, in post Soviet and developing countries.
Contrasted with Georgia, car market is comparatively developed, improved and studied in Russia. Perhaps, it was because local car production used to be quite well spread “feeding” the whole post-Soviet area with home production. Nowadays, Russian “Devyatka” and “Niva” gradually give way to foreign auto concerns. According to the last two years’ data, share of foreign auto parks grows annually. Last year official dealers of Russia sold 108 thousands of foreign cars while the sum from registered cars was more than 10 billion US dollars with 1,7 or 16,5% falling at the share of foreign cars. 40% falls at the share of local cars and the rest – at the cars imported and realised by natural persons. This year interesting developments are expected to take place in this market.
Foreign auto concerns of Russia plan realisation of 170 thousand cars. The plan will be implemented soon as demand for foreign cars increases each month.
Notwithstanding the 22-23% increase of Euro rate against dollar, the change still has had an effect on cars. Price fluctuation led to increased sales of some car brands. Prices of cars in US dollars increased by only 2-3%. In Euro sector the only losers were cheap cars. The price dynamics did not effect expensive cars though carmakers tried to transit to Euro mildly and friendly. To experts’ estimations, parity of US dollars with Euro will no longer have any effect on the price dynamics of car sales. Besides, situation in international market has changed in favour for the owners of auto concerns who have avoided increase of prices on cars from the very start.
Compared with Georgia, representatives of foreign auto concerns who have made active business in Russian market, resort to different methods for final development of the market: they have increased guarantee period to three years with the purpose of attracting a customer and decreased tariff of car insurance as well as interest rates of credits meant for the purchase of foreign cars. They have also promoted the work of service centres throughout Russia. For instance, customers of Chrysler enjoy free-of-charge repair service of cars. Such service centres are situated not only in city centres, but also in A roads. Local car production has similar service either from the financial or organisational point of view.
Joint auto concerns will be established in Russia due to the increased competition and demand for foreign cars. In the end of this year a new concern was established together with Ford. However, some oppose this direction in Russia. They think that Russia can find itself in the same position as Brazil where there are mainly VW, Fiat and Chevrolet brand cars produced in this country, i.e. there is the danger that a customer can lose the right of choice as there is a trend towards the development of Russian market by cars manufactured by joint enterprises, which suits both Russian and foreign producers and dealers. Their interests coincide in other directions, too. Foreign investors and Russian dealers think that natural persons that trade in foreign cars are serious competitors. Compared with legal entities, they pay less customs taxes. A normative document is developed in this direction. According to this document, foreign and Russian car-makers or dealers again hold the same position and support 35% increase of customs taxes on foreign cars. True, there is no official document yet, though difference of opinions can already be observable. What is most interesting, such approach towards the issue is aimed against the trade of natural persons in foreign cars.
The last three years are of interest as far as import of cars is concerned. They are viewed differently in both Russian and Georgian car market.
Russian state structures have failed to establish customs tariff in due time, which led to disorderly inflow of foreign cars. There were already 630 thousand second-hand cars when the decision on the increase of customs tax on more than 7 years’ cars came in force.
As for Georgia, a great number of unregistered foreign cars have been imported to Georgia.
Comparison of wide-spread information of customs department, headquarters of traffic police and compulsory insurance fund on imported cars and analysis of the consumption level of petrol and fuel in Georgia reveal an interesting picture.
Contrasted with Russia, in our country car import climate is created solely by natural persons. Thus, the problems in Russian market are partly strange to Georgia. There are neither well developed service centres of foreign concerns here, nor there are any dealers. There is no boom caused by the creation of auto enterprises. Nor is our population deprived of the right to choose.
The close circle is created by the summed-up data of the above-mentioned departments. According to the data of the headquarters of traffic police, 187526 cars passed through check-up in 2000. Of this number, 110484 met technical requirements. In 2001, 216308 cars were checked of which 160371 cars met technical requirements, while in 2002, 154855 of 211359 checked cars met technical requirements. Among them share of foreign cars loos as follows: according to the Y2002 data, 43926 foreign cars have been registered in the headquarters of traffic police of which 38 913 were checked and among them, 36 291 met technical requirements. The data of customs department for 2000-2002 revealed the fact that the number of customs cleared cars made up 23 637, which, according to the data of traffic police headquarters, is much less than the number of cars checked in the course of one year.
The information of customs department looks as follows: 7141 cars were cleared from customs taxes in 2000. Their total value is 19218542,96 US dollars with the tax charge amounting to 6964482,31 US dollars; in 2001, 8967 cars with the total cost of 17001251,46 US dollars and 7927613,40 US dollars’ tax charge were cleared from customs taxes. According to the Y2002 data, 7529 cars were cleared from customs with the total cost of 25291810,90 US dollars and 6963885,50 tax charge.
According to the data of compulsory insurance fund, 317888 cars were registered in 2000, 319399 in 2001 while in 2002 this figure amounted to 325560, of which 137374 cars in 2000, 243625 cars in 2001 and 271313 cars in 2002 met technical requirements. Insurance cover issued by compulsory insurance fund for loss indemnity totalled 257089 GEL in 2000, 243625 GEL in 2001, 271313 GEL in 2002. Insurance cover issued by private insurance companies for loss indemnity totalled 701700 GEL in 2000, 943300 GEL in 2001, 748400 GEL in 2002. From this point of view it is noteworthy that in the conditions of reduced insurance premium, the sharp growth trend of damage put compulsory insurance fund in an unfavourable situation. For instance, compared with 1999, insurance premium decreased by 35% in 2001 while the index of damage rose by 45%.
As for the quantity of cleared and consumed fuel, it is as follows: For instance, according to 1997 data, 456249 tons of petrol have been imported to Georgia in the course of one year while 527570 tons have been spent among them, 405720 tons fall at the share of cars. As far as we can see from these data, the quantity of consumed petrol is more than import by 71339 tons. We should say that it is possible to register consumed petrol.
Proceeding from the above-mentioned, we can see that import of contraband cars has become threateningly widespread. The way out for Georgia is to join world convention – “carnet de passages”. This will make it possible to import cars temporarily without any problems and fight smuggling of cars as well as enable our citizens to make commercial, tourist and personal tours in a civilised way.