Azerbaijan may emerge as key regional market for Chinese cars
By Asif Aydinli
Recently, Georgian media reported on China's ambitious plans to open a market for Chinese-made cars in Georgia. This strategic move was confirmed by China's ambassador to Georgia, Zhou Qian, who stated that plans are underway to organize a market specifically for cars imported from China.
Currently, the presence of Chinese car manufacturers in the Georgian market is relatively weak. In the first three months of 2024, a total of 32,204 cars were imported into Georgia, amounting to a total of $486.575 million. Out of these, only a small fraction, precisely 1.7%, were Chinese cars, which translates to 547 units worth $7.824 million. The average price of a Chinese car in this period was calculated to be $14,300.
Despite the modest market share, there has been a noticeable increase in the number of specialized car dealerships in Georgia offering products from Chinese manufacturers. Over the past few years, particularly since 2019, several such dealerships have been established.
In 2019, the Georgian authorities made a significant announcement regarding the construction of an electric car factory in Kutaisi. This project was part of a memorandum of understanding between the Georgian holding company AiGroup and the Chinese consortium Changan Automobile. The initial plan was to complete the construction within 24 months and to present the first Georgian electric car, named "Orvo," which would be based on the Changan Eado sedan. However, the outbreak of the coronavirus pandemic and the subsequent global disruptions caused considerable delays in these plans.
Currently, the focus of the Chinese ambassador's statement is on the establishment of a market for cars imported from China rather than on resuming the construction of the plant in Kutaisi. This shift in focus could be attributed to the broader strategic plans of the Chinese automotive industry, which include opening new factories in other countries such as Azerbaijan, Turkey, Kazakhstan, and Hungary. Given these plans, it seems less likely that the Georgian market will evolve into a significant regional or international hub for the re-export of Chinese cars.
In contrast to Georgia, Azerbaijan has already gained valuable experience in cooperating with Chinese car manufacturers. Back in 2010, the NAZ-Lifan plant in Nakhchivan began producing cars using Chinese components. More recently, in 2022, the assembly of pickups and electric vehicles of the Chinese brand ZX Auto commenced at the same plant. The year 2023 saw the importation of approximately 7,700 Chinese cars into Azerbaijan, with a total value of $157.2 million. This growing interest in Chinese cars among Azerbaijani consumers highlights the potential for further expansion.
This increasing demand has, in turn, stimulated the production of Chinese cars within Azerbaijan. In 2023, significant amendments were made to the Azerbaijani Tax Code, which included exempting the production of passenger cars from VAT for a period of 10 years. This legislative change is expected to reduce the cost of domestically produced cars by at least 18% compared to their imported counterparts.
Transport expert Elmadin Muradli has emphasized the benefits of deepening ties with China, which is currently the world's largest economy. He pointed out that cars made in China are used globally and that China's vast production capacities are central to the development of the automotive industry. Even global automotive brands that do not originate from China have established factories there. Azerbaijan, by participating in these global processes, is stimulating the development of its own local automotive industry.
Muradli expressed optimism about the prospects, stating that with proper attention, Azerbaijan could soon become a regional leader in the automotive industry. He noted that Chinese cars are gaining significant traction in Central Asian countries, where new factories are being established. Muradli believes that Azerbaijan should seize similar opportunities to enhance its automotive sector.
Considering the current political situation in Georgia, it may be more advantageous for Chinese businesses to prioritize Azerbaijan as a location for establishing automobile production. Azerbaijan offers favorable conditions for setting up production facilities, including a stable economic environment and supportive infrastructure.
Additionally, Azerbaijan boasts a significant consumer market, presenting excellent opportunities for product sales. In the near future, Azerbaijan could emerge as a key regional market for Chinese cars in the South Caucasus and serve as a strategic entry point for expanding into the European market.
Therefore, taking these factors into account, it may be a prudent decision for Chinese companies to focus their production and sales strategies on Azerbaijan, leveraging the country's favorable business environment and growing market potential.
Similar news
