Georgia, a small nation in the South Caucasus, has become a multibillion-dollar powerhouse of the international used car market. Most of the vehicles come from the United States and, by almost all indications, many end up in Russia.
On the dusty outskirts of Rustavi, an industrial city 20 km southeast of Tbilisi, Georgia’s capital, there is a large open-air parking area.
With a size equivalent to more than 40 football fieldsthis space accumulates thousands of vehicles for sale.
Virtually any car can be found here, from Mercedes, Porsche and Jaguar to Toyota and, more recently, Tesla. Everyone is here.
A booming business
One of the largest parking lots is owned by Caucasus Auto Import (CAI), a company that buys used cars at auctions in the United States.
Generally these vehicles were injured in accidents and American insurance companies wrote them off.
CAI says its “team of experts” in the United States collects the cars and arranges their export by container ship 10,000 km away, to a port on Georgia’s Black Sea coast. Damaged cars are repaired by Georgian mechanics.
“Our company has contributed a lot to the renewal of Georgia’s car fleet,” says David Gulashvili, deputy executive director of CAI.
And he adds: “When we started our business in 2004, the Georgian automotive infrastructure was completely Soviet-made, such as Lada and Vaz,” referring to these two Russian brands.
He assures that his company, which today has 600 employees, has responded to “a great demand for vehicles produced in the West.”
Last year Georgia imported cars worth $3.1 billion dollarsaccording to official figures.
After exported vehicles worth $2.1 billionmainly to the former Soviet republics of the Caucasus and Central Asia.
In fact, automobiles are Georgia’s second most important export product in monetary value, after copper ore.
In the huge Rustavi car market, curious customers are looking for a good deal. Each car has a card on the inside of the windshield indicating its price, engine size, and manufacturing date.
Alisher Tezikbayev has traveled here from Kazakhstan. He and a group of friends explore the Toyota section.
“We have been re-exporting cars from Georgia for about 3 and a half years. We ship vehicles to Kazakhstan and we organize tours when customers come to Georgia to choose their own car,” says Tezikbayev, who posts videos for his 100,000 followers on Tik-Tok.
Georgia used to export second-hand American and European cars to its northern neighbor, Russia, with which it shares a border, but this is now illegal due to the Russian invasion of Ukraine in 2022.
In September 2023, the Georgian Tax Service announced that, in line with the latest Western sanctions against Russia, it was restricting the re-export and transit of cars imported from the United States or Europe to Russian territory and Belarus.
Georgian officials have long denied that the country is complicit in helping Russia evade trade embargoes.
However, a recent investigation by the Georgian publication Ifacti showed numerous legal loopholes exploited by a whole army of car dealers on both sides of the Russian-Georgian border.
David Gulashvili assures that his company no longer has any type of trade with Russia.
“Since the first day of the war we have restricted any type of transaction from Russia, any type of export to Russia. “You will not see a single car exported by Caucasus Auto Import to Russia.”
However, he explains that there is no mechanism to track the final destination of automobiles re-exported to other countries.
Since the Russian invasion of Ukraine there has been a sharp increase in used car exports to Kazakhstan, Kyrgyzstan and Armenia, all members of the Russian-led customs union.
This means that a vehicle registered in any of those countries can be brought to Russia with minimal tariffs.
Figures from Georgia’s national statistics agency suggest that vehicles are indeed being exported to Russia.
It specifies that in 2022 Georgia sold 7,352 used cars to Kazakhstan, while in 2023 the figure was 39,896, five times more.
More and more hybrids and electric
Geopolitical calculations aside, the underlying success of Georgia’s used car industry can be explained by its geography: it has access to Europe through its Black Sea ports and Central Asia through Bakuon the Caspian Sea coast of neighboring Azerbaijan.
Another key component is the affordable cost of labor when repairing salvaged vehicles.
“Most of the time, restoring damaged cars in the United States does not make economic sense,” says Gulashvili.
This is due, he maintains, “to the cost of human resources, the much higher maintenance costs and the legal costs necessary to get these cars back on the road, a process that takes a long time and is very expensive.
“In the United States, rebuilding a car and making it legal takes six months and costs about $5,000. In Georgia, repairing the same car costs $1,000 and a month”, sentence.
In a huge warehouse on the outskirts of Tbilisi, Zaza Andreashvili leans over a car engine fixed to a special bracket. The mechanic points to the cylinders, which he has just cleaned.
“The engine is the heart of the vehicle. In humans, if your heart stops working, you die. The same goes for cars: If the engine stops working, the car dies”, he alleges.
Andreashvili has been repairing car engines for almost 30 years. “We used to learn with books, at that time there was no internet,” he explains.
A metallic noise is heard at the door next to his workshop. Roma and his apprentice Boris specialize in bodywork repairs.
Boris is with a body repairman fixing the fender of a wrecked car. Roma, dressed in a brown T-shirt that reads “USA,” claims to have been repairing vehicles for 50 years.
“Mercedes has the best metal, Volvo and Toyota are also good, but in some cars the body is so thin that it looks like a sheet of paper,” he says.
Although the majority of cars imported into Georgia are gasoline and diesel, Gulashvili says that demand for electric vehicles, and in particular hybrid vehicles, is growing rapidly.
“About 30% of the cars we bring right now are hybrids. They are not fully electric, but they are hybrids like the Toyota Prius. Their growth rate is through the roof, it’s like from 300% to 400% quarter after quarter,” he asserts.
Tesla’s largest resale market, Gulashvili adds, is Ukraine, where it has 100 employees.
“It is very expensive and risky, but we are still trying to expand the business there. We are also exporting a lot of pickup trucks to Ukraine, which are used to fight Russia,” he says.
click here to read more stories from BBC News World.
Subscribe here to our new newsletter to receive a selection of our best content of the week every Friday.
You can also follow us on YouTube, instagram, TikTok, x, Facebook and in our new whatsapp channel.
And remember that you can receive notifications in our app. Download the latest version and activate them.
- Why Canada became a car theft capital of the world
- David Buick, the pioneering automobile genius who died penniless
- What is the controversial “Russian law” that Georgia approved and has caused massive protests for weeks?