Georgia's Auto Market Enters a New Phase of Adaptation and Development - Caucasus Auto Review

The Georgian automotive market has already overcome numerous challenges. This was stated to BusinessPartner by representatives of Caucasus Auto.

According to the company, the Georgian automotive market has weathered many challenges before, and this latest change will be no exception. The reference is to the increase in vehicle customs duty rates in Georgia, which Parliament reviewed through an expedited procedure and which came into force on April 2.

As Caucasus Auto states, any regulatory or economic shock in this sector signals not an end, but the beginning of a new phase. Ultimately, success will be achieved by those market players who adapt most quickly to the new reality.

Today, the market is transitioning into a phase where change is no longer a temporary fluctuation - it is becoming a structural transformation.

Higher Customs Duties on Vehicles Over 6 YearsOld - The Market's New Filter

The company explains that from April 2026, a new excise tax logic came into effect for passenger vehicles. For vehicles up to and including 6 years old, the base rate was set at 1.5 GEL per 1 cm³, while for vehicles older than 6 years, the rate was set at 4.5 GEL per 1 cm³.

As a result of this change, customs clearance costs for vehicles manufactured before 2020 have increased by 3 to 4 times in some cases, directly affecting their liquidity.

Importantly, the change does not apply to electric vehicles, meaning their competitiveness on the market has been preserved.

It is also worth noting that the import of pre-2020 vehicles for re-export purposes remains unrestricted, which leaves a degree of flexibility for international players.

Short-Term Market Reaction and the Adaptation Phase

As Caucasus Auto states, the market responded swiftly to the announcement of the regulation - with a reduction in import volumes.

"The Georgian auto market is characterized by seasonality, and the beginning of the second quarter of the year is traditionally a slow period. This factor was compounded by the effect of the regulatory change, which temporarily reduced market activity even further.

However, the anticipation of the change also created the opposite effect - purchases and stockpiling increased in February and March.

Today, the market has already moved past the initial shock and entered the adaptation phase, which typically lasts 2 to 6 months. During this period, new prices, demand, and inventory are redistributed," the company noted.

Which Cars Are Better to Buy in Georgia

Stricter customs duties from 2020 onwards, along with fuel costs and environmental requirements, are making older models less practical. The infographic below shows which vehicles are worth replacing in Georgia.

For more details on what is changing in the re-export market and how the sector is adapting to the new reality, see the full article at the link.