Georgia Cars: How the State Became a Used Car Hub

The small South Caucasus country of Georgia has become a multi-billion dollar hub for the international used car market. The vehicles are mostly sourced from the US and many appear to end up in Russia.

On the dusty outskirts of Rustavi, an industrial city 20 km (12 mi) southeast of Tbilisi, the capital of Georgia, is a vast area of ​​open-air car parks.

Equal to the size of more than 40 football pitches, it hosts thousands of vehicles for sale.

You can find any automobile your heart desires – Mercedes, Porsches, Jaguars, Toyotas and recently, Teslas. They are all here.

One of the largest carparks is owned by Caucasus Auto Import (CAI), a company that buys used cars from auctions in the United States. The vehicles are often so badly damaged in accidents that American insurance companies write them off.

CAI said its “team of experts” in the state would personally pick up the cars and then arrange their export via container ship to a port 10,000 kilometers (6,000 miles) along Georgia's Black Sea coast. The damaged cars will then be fixed by Georgian mechanics.

David Gulashvili, Deputy Chief Executive of CAI, said, “Our company has contributed a lot to the renewal of the Georgian car fleet. “When we started our business in 2004, the Georgian automotive infrastructure was entirely made in the Soviet Union, e.g. [Soviet brands] Lada and Waze.”

He says his company has responded to “huge demand for Western-produced vehicles”. Today the company has 600 employees.

According to government figures, Georgia imported cars worth $3.1 billion (£2.4bn) last year. It then exported $2.1 billion worth of vehicles, mainly to former Soviet republics in the Caucasus and Central Asia. The car is actually from Georgia Second largest export By standards, after copper ore.

Across Rustavi's massive car market, curious customers are looking for a deal Each car has a card inside the windscreen indicating the price, engine size and date of manufacture.

Alisher Tezikbaev traveled here from Kazakhstan. He and a group of his friends are searching the Toyota department.

“We have been re-exporting cars from Georgia for about 3.5 years. We send cars to Kazakhstan and organize auto tours, while clients come to Georgia to pick their own cars,” said Mr. Tezikbaev, who posts videos to his 100,000 followers on Tik Tok.

Georgia used to export second-hand US and European cars to its northern neighbor Russia, with which it shares a border. But in 2022, Russia's invasion of Ukraine officially stopped it.

In September 2023, the Georgian Revenue Service announced that, in line with the then-latest Western sanctions against Russia, it was restricting the re-export and transit of automobiles imported from the United States or Europe to Russia and Belarus.

And Georgian officials have long denied that the country was involved in helping Russia evade trade sanctions.

Still a Recent investigations Effecti by Georgian media publications showed numerous loopholes exploited by an army of car dealers on both sides of the Russian-Georgian border.

David Gulashvili said his company no longer does business with Russia. “Since the first day of the war we have restricted any trade from Russia, any export to Russia. You won't see a single car exported by Caucasus Auto Import to Russia.”

However, he added that there is no existing system to monitor the final destination of cars re-exported to other countries.

And exports of used cars to Kazakhstan, Kyrgyzstan and Armenia — all members of the Russian-led customs union — have soared since Russia's invasion of Ukraine.

This means that a car registered in any country can be driven in Russia with minimal duties.

Figures from the National Statistics Agency of Georgia suggest that cars are indeed going to Russia. It says Georgia exported 7,352 used cars to Kazakhstan in 2022, while the number in 2023 was 39,896, a more than five-fold increase.

While geopolitical machinations are raging, the underlying success of Georgia's second-hand car industry can be explained by its geography. It has access to Europe via Black Sea ports and to Central Asia via Baku on the Caspian coast of neighboring Azerbaijan.

Another key factor in fixing salvaged cars is the affordability of labor.

“These cars that are damaged in the United States, most of the time it doesn't make economic sense to rebuild them in the United States,” Mr. Gulashvili said.

“This is due to the cost of human resources, high service costs, and legal costs to get those cars back on the road, a time-consuming and very expensive process.

“Rebuilding a car in the US and getting it legal again takes six months and lets say $5,000. It takes $1,000 and a month to fix the same car in Georgia.”

In a sprawling warehouse on the outskirts of Tbilisi, Zaja Andreshvili leans over a car engine fixed on a special stand. The mechanic points to the cylinder, which he has just cleaned.

“The engine is the heart of the car. Just like humans, if your heart stops working you die. Same with cars, if the engine stops working the car dies.”

Mr. Andreshvili has been repairing car engines for almost 30 years. “We used to learn through books, there was no internet then,” he says.

There is a knock at the door next to Mr. Andreshvili's workshop. Roma and his apprentice Boris specialize in bodywork repairs.

With a panel-beater, Boris is reshaping an automobile's near-side wing. Roma, wearing a brown T-shirt with USA written on the front, said he has been repairing cars for 50 years.

“Mercedes has the best metal, Volvos and Toyotas are good too, but some cars have bodywork so thin it's like a piece of paper,” he says.

While most cars imported into Georgia are petrol and diesel powered, Mr Gulashvili said there is a rapidly growing demand for electric and especially hybrid cars.

“About 30% of the cars we are bringing in right now are hybrids. It's not fully electric, but it's a hybrid like the Toyota Prius. The growth rate is off the charts, it's like 300 – 400% rate quarter on quarter.”

The biggest resale market for Tesla, Mr Gulashvili added, is Ukraine, where it has 100 employees.

“It's very expensive and it's very risky, but we're still trying to get traction there. We are also importing a lot of pickup trucks to Ukraine, which are used in the war against Russia.”