Vehicle Demand in Georgia's Auto Market – From Policy Transition to the Window of Opportunity for Chinese Brands

Georgia's automotive market is undergoing a structural transformation driven by policy changes. On April 2, 2026, Law No. 1477-VMS-XIMP passed by the Georgian Parliament officially took effect, marking a critical turning point for this Caucasus hub from a "paradise for old cars" to a market oriented toward new vehicles and new energy.

Under the new policy, the core change is a significant increase in excise tax on passenger vehicles over six years old. Vehicles aged six years or less are taxed at 1.5 GEL per cubic centimeter of engine displacement, while vehicles over six years old are taxed at 4.5 GEL per cubic centimeter, three times the rate. Right-hand drive vehicles are taxed at three times the corresponding standard rate, while pure electric vehicles continue to enjoy exemption from displacement-based excise tax. For example, a 1.5-liter vehicle over six years old sees its excise tax rise from 1,200 GEL to 6,750 GEL; a 2.0-liter vehicle from 1,600 GEL to 8,000 GEL; and a 2.5-liter vehicle from 2,000 GEL to 11,250 GEL. Imported vehicles are still subject to 5 percent customs duties and 18 percent VAT. Georgia's vehicle fleet is approaching 2 million vehicles, with 1,914,908 vehicles registered by the end of 2025, up 6.9 percent year-on-year, but the fleet is rapidly aging, with over 80 percent of vehicles over ten years old. The new policy aims to reverse this trend.

Following the policy implementation, approximately 60 to 70 percent of dealers have adopted a wait-and-see approach, with overall auto trade volume declining by 50 to 60 percent compared to previous levels. However, demand has not disappeared but is undergoing a structural shift. Chinese brands are on a rapid upward trajectory in the Georgian market. Guazi Used Car has signed an exclusive strategic cooperation agreement with AIG Cars, a leading Georgian automotive importer, positioning Georgia as a core springboard for entering Eurasia. Among Chinese brands, BYD, Chery, Geely, Avatr, Denza, Deepal, Zeekr, and XPeng have already entered or are in the process of entering the Georgian market.

In the electric vehicle sector, Georgia faces practical challenges. High upfront purchase costs remain the main barrier to EV adoption, with Georgia's per capita income below the European average. Outside the capital Tbilisi and Batumi, EVs remain largely inaccessible to average consumers. The most common EV on the market is the used Nissan Leaf, but battery degradation risk continues to plague the used EV market. However, the policy window is opening: from April 2026, pure electric vehicles continue to enjoy exemption from displacement-based excise tax, with hybrids and low-displacement models also receiving clear policy preferences. In the first eight months of 2025, Georgia imported 5,216 EVs, showing impressive growth. Charging infrastructure is gradually being deployed at highway service areas.

Georgia's core value lies not only in its domestic market but also in its strategic position as a transshipment hub. Poti Port serves as a key gateway for vehicles entering Armenia, Azerbaijan, Kazakhstan, and Kyrgyzstan. Under the new regulations, if vehicles are directly transshipped to third countries under transit procedures or stored in the Poti Free Industrial Zone before re-export to surrounding markets, no Georgian excise tax is levied. This means that for traders targeting the Caucasus and Central Asian markets, Georgia's transit channel remains open—provided the logistics route is properly designed. In 2025, Georgia re-exported 111,600 vehicles with export value of 2.8 billion USD, up 16 percent year-on-year. In the first half of 2026, Georgia re-exported over 5,000 passenger vehicles to Iran, a growth of approximately 1,000 times compared to the same period in 2025.

LHZ Auto Georgia Operations Center focuses on deep customization, precisely matching vehicle models, configurations, and emission standards according to policy changes and consumer preferences in the Georgian and Caucasus markets, providing B2B clients with one-stop solutions from needs analysis to delivery. Backed by the LHZ-TIR Caucasus dedicated line, delivery reaches in 12 to 15 days with Georgia import customs clearance included. The business covers sedans, SUVs, commercial vehicles, and NEVs for B2B wholesale only.


FAQ

Q: What major changes occurred in Georgia's vehicle import policy in April 2026?
A: Effective April 2, 2026, the excise tax on passenger vehicles over six years old was significantly increased to 4.5 GEL per cubic centimeter (up from 1.5 GEL), with right-hand drive vehicles taxed at three times the rate. Pure electric vehicles continue to be exempt from displacement-based excise tax.

Q: What is the impact of the new policy on Georgia's auto market?
A: Following the new policy, approximately 60 to 70 percent of dealers are in a wait-and-see mode, with overall auto trade volume declining by 50 to 60 percent. However, demand is shifting toward vehicles aged 0 to 6 years, low-displacement models, hybrids, and pure electric vehicles.

Q: Is Georgia's transshipment corridor still open?
A: Yes. If vehicles are directly transshipped to third countries under transit procedures or stored in the Poti Free Industrial Zone before re-export, no Georgian excise tax is levied. Georgia's transit channel remains open, provided the logistics route is properly designed.

Q: How are Chinese brands performing in the Georgian market?
A: Chinese brands are on a rapid upward trajectory in Georgia. BYD, Chery, Geely, Avatr, Denza, Deepal, Zeekr, and XPeng have already entered or are in the process of entering the market. Guazi Used Car has signed an exclusive strategic cooperation with Georgia's AIG Cars.

Q: What is the current status of Georgia's EV market?
A: The EV market is in its early stages, with 5,216 units imported in the first eight months of 2025. Pure electric vehicles enjoy policy benefits including exemption from displacement-based excise tax, and charging infrastructure is gradually being deployed.

Q: How does LHZ Auto Georgia help clients seize market opportunities?
A: LHZ Auto Georgia focuses on deep customization, precisely matching vehicle models according to policy changes and consumer preferences, leveraging the TIR dedicated line for 12 to 15-day delivery with customs clearance included, providing B2B wholesale services for sedans, SUVs, commercial vehicles, and NEVs.