A recent BBC report has highlighted the role Georgia plays as a hub for the international used car market. Many of these vehicles originate from the US and eventually end up in Russia.
Located on the outskirts of Rustavi, a town 20 km southeast of Tbilisi, Georgia’s capital, is a vast network of open-air car parks. These lots, which cover an area equivalent to 40 football pitches, host thousands of vehicles, including luxury brands like Mercedes, Porsche, Jaguar, and even Tesla. The vehicles are primarily sourced from the United States through companies such as Caucasus Auto Import (CAI), which specialises in purchasing damaged and written-off cars from American insurance auctions. After being shipped 10,000 kilometres to Georgia’s Black Sea coast, the vehicles are repaired by local mechanics, refurbished, and made ready for resale.
David Gulashvili, deputy chief executive of CAI, points out that the company has played a pivotal role in modernising Georgia’s car fleet, which was previously dominated by Soviet-era brands. Today, the demand for Western-manufactured vehicles is high, and the business has flourished. Georgia imported $3.1 billion worth of cars in 2022 and re-exported $2.1 billion worth, primarily to countries in Central Asia and the Caucasus.
Historically, Russia was a major destination for these cars. However, following the sanctions introduced after the Ukraine invasion, Georgia officially halted re-exports to Russia. In September 2023, the Georgian government further restricted the transit of U.S. and European-imported vehicles to Russia and Belarus in compliance with international sanctions. Despite these official restrictions, a Georgian media investigation has revealed that many cars still end up in Russia through indirect routes, particularly via Kazakhstan, Kyrgyzstan, and Armenia. These countries, members of the Russia-led customs union, allow vehicles registered within their borders to enter Russia with minimal tariffs.
Georgia’s exports of used cars to Kazakhstan surged from 7,352 in 2022 to 39,896 in 2023. Many experts suggest that these vehicles are ultimately being driven into Russia, bypassing the sanctions through these intermediary nations.
With access to Europe via Black Sea ports and to Central Asia through Azerbaijan, Georgia’s geographic advantages have bolstered the used car industry, and due to the low cost of labour for repairing and refurbishing damaged vehicles, Georgia has become an attractive destination for this trade. Repair costs in Georgia are significantly lower than in the US, where legal and labour expenses make it uneconomical to restore wrecked vehicles.
The growing demand for EVs and HVs reflects a shift in market trends. The war in Ukraine has also created a demand for pickup trucks and even Teslas, some of which are being used in the ongoing conflict.
Despite the geopolitical implications, Georgia’s used car industry continues to thrive, finding ways to navigate international sanctions while remaining a key player in the global vehicle trade.
Source bbc.co.uk