BBCGeorgia is an international used car hub
Georgia, a small country in the South Caucasus, is at the heart of the multi-billion dollar international used car market. The vehicles are primarily sourced from the United States, and many appear to end up in Russia.
In the dusty suburb of Rustavi, an industrial city 20 km (12 miles) southeast of Georgia’s capital, Tbilisi, there is a vast open-air parking lot.
It’s an area the size of more than 40 soccer fields, and thousands of vehicles are up for sale.
You can find almost any car you want, including Mercedes, Porsche, Jaguar, Toyota, and more recently Tesla. They're all here.
One of the largest parking lots is owned by Caucasus Auto Import (CAI), a company that buys used cars from auctions in the United States. These vehicles were heavily damaged in accidents and were often written off by American insurance companies.
CAI said a “team of experts" in the United States would pick up the cars directly and arrange for export by container ship 10,000 kilometers (6,000 miles) to a port on Georgia’s Black Sea coast. The damaged car will be repaired by a mechanic in Georgia.
“We have made significant contributions to the renewal of Georgia’s vehicle fleet,” said CAI Deputy CEO David Grashvili. “When we started in 2004, Georgia’s automotive infrastructure was completely Soviet-made, like[Soviet brands]Lada and Vaz.”
He says his company has met “a lot of demand for cars produced in the West.” The company currently has 600 employees.
Many of the cars sourced from the US are not in good condition when they arrive in Georgia
Georgia imported $3.1 billion (£2.4 billion) worth of cars last year, according to official figures. It then exported vehicles worth $2.1 billion, mainly to former Soviet Union countries in the Caucasus and Central Asia. In fact, automobiles are Georgia’s second-largest export by value, after copper ore.
Rustavi’s huge car market has curious customers looking for deals. Each car has a card affixed to the inside of its windshield that shows the price, engine size, and date of manufacture.
Alisher Tezhikbayev came here from Kazakhstan. He and a group of friends are exploring the Toyota area.
“We have been re-exporting cars from Georgia for about three and a half years. When a customer comes to Georgia to choose his car, we send the car to Kazakhstan and organize an auto tour.” said Tejikbayev, who posts videos to his 100,000 followers on Tik Tok.
Georgia used to export used cars from the United States and Europe to its neighbor to the north, Russia. However, as a result of Russia’s invasion of Ukraine in 2022, it was officially suspended.
In September 2023, the Georgian Revenue Service announced that it would restrict the re-export and transportation of cars imported from the United States or Europe to Russia and Belarus, in accordance with the then latest Western sanctions against Russia.
And Georgian officials have long denied that the country was complicit in helping Russia circumvent the embargo.
However, a recent investigation by Georgian media publication Ifakti revealed numerous loopholes exploited by the car dealer army on both sides of the Russian-Georgian border.
David Grashvili said his company no longer does business with Russia. “Since the first day of the war, we have restricted all kinds of trade from Russia, all kinds of exports to Russia. Not a single car is exported to Russia by Caucasus Auto Import.”
However, there is no existing mechanism to monitor the final destination of vehicles re-exported to other countries, he added.
Since Russia’s invasion of Ukraine, exports of used cars to Kazakhstan, Kyrgyzstan, and Armenia have increased rapidly, all of which are members of the Russia-led customs union.
This means that vehicles registered in these countries can be driven to Russia with minimal customs duties.
Statistics from Georgia’s State Statistics Office suggest that cars are indeed flowing into Russia. According to the report, Georgia exported 7,352 used cars to Kazakhstan in 2022, but in 2023 that number increased more than five times to 39,896.
Georgia’s used car market is said to be aided by its geographic location.
While geopolitical intrigue is at play, the underlying success of Georgia’s used car industry can be explained by its geography. It has access to Europe via ports on the Black Sea and Central Asia via Baku on the Caspian coast of neighboring Azerbaijan.
Another important factor is the affordability of labor costs when repairing salvaged cars.
“These cars that are damaged in the U.S., in most cases, it doesn’t make economic sense to rebuild them in the U.S.,” Glashvili says.
“That’s because it’s a very time-consuming and expensive process, with labor costs, much higher service costs, and legal costs to get those cars back on the road.
“In the United States, it takes six months and, say, $5,000 to rebuild a car and make it legal again. In Georgia, it takes $1,000 and a month to fix the same car.”
In a vast warehouse on the outskirts of Tbilisi, Zaza Andreashvili leans against the engine of a car mounted on a special stand. The mechanic points to the cylinder he just cleaned.
“The engine is the heart of the car. Just like humans, if the heart stops, we die. It’s the same with cars; if the engine stops, the car dies.”
Andreashvili has been repairing car engines for nearly 30 years. “We learned from books; there was no internet back then,” he says.
A banging sound can be heard next to Andreashvili’s workshop. Roman and his disciple Boris specialize in car body repair.
Boris uses a panel beater to reshape the damaged front wing of the car. Roman, 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. Volvo and Toyota are also good, but the body structure on some cars is paper-thin,” he says.
Mechanic Zaza Andreashvili has been repairing car engines for almost 30 years.
Most cars imported into Georgia have gasoline or diesel engines, but demand for electric cars, especially hybrids, is rapidly increasing, Glashvili said.
“About 30% of the cars we currently have are hybrids, not fully electric, but hybrids like the Toyota Prius.The growth rate is extraordinary, something like 300% to 400% quarter over quarter. is.”
Grashibili added that Tesla’s largest resale market is Ukraine, where he is based with 100 staff.
“It’s very expensive, very dangerous, but we’re still trying to get traction there. We’re also importing a lot of pickup trucks into Ukraine that will be used to fight Russia. .”
