Georgia has become a multi-billion-dollar hub for the global used car market, sourcing most vehicles from the United States. Despite Western sanctions against Russia, many cars are still finding their way there through loopholes.
In Rustavi, a town near Tbilisi, a vast open-air car market spans over 40 football fields. Thousands of vehicles, including Mercedes, Porsches, and Teslas, are available, mostly imported from the U.S. after being dismissed by American insurers.
Caucasus Auto Import (CAI), a major player in this trade, buys these cars from U.S. auctions, ships them 10,000 kilometers to Georgia’s Black Sea ports, and repairs them at a fraction of the cost. “When we started our business in 2004, Georgian automotive infrastructure was totally Soviet Union produced, like [Soviet brands] Lada and Vaz,” said David Gulashvili, CAI’s deputy CEO.
In 2022, Georgia imported $3.1 billion worth of cars and re-exported $2.1 billion, mainly to former Soviet republics. Kazakhstan, Kyrgyzstan, and Armenia, all part of Russia’s customs union, have seen sharp increases in imports. In Kazakhstan, car imports from Georgia jumped five-fold between 2022 and 2023.
Although Georgia officially stopped car exports to Russia following its invasion of Ukraine, local media investigations revealed that many vehicles still reach Russia through indirect routes. Cars imported into Kazakhstan and other customs union members can cross into Russia, avoiding sanctions.
Gulashvili denies that CAI exports cars to Russia, noting that the company halted all Russian transactions at the start of the war. However, he admits there is no system to track where re-exported cars end up, raising concerns about Georgia’s role in circumventing sanctions.
Georgia’s car trade thrives due to its strategic location and low-cost labor. With access to Europe via the Black Sea and Central Asia through Azerbaijan, it is a natural logistical hub. Repairing salvaged cars in Georgia is far cheaper than in the U.S., with Gulashvili noting, “What costs $5,000 and six months in the U.S. takes $1,000 and one month in Georgia.”
While petrol and diesel cars dominate imports, demand for hybrid vehicles is rising fast. About 30% of CAI’s imports are now hybrids, with electric car demand growing rapidly. Ukraine is the largest market for Tesla resales, despite the risks of trading in a conflict zone.
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