BBC
Georgia has become a hub for international used cars
Georgia, a small nation in the South Caucasus, has become a multibillion-dollar hub for the international used car market. The vehicles mostly come from the United States and many appear to end up in Russia.
In the dusty suburb of Rustavi, an industrial town 20 km southeast of the Georgian capital Tbilisi, there is a large area of open-air parking lots.
The size of more than 40 football fields, it houses thousands of vehicles for sale.
You can find just about any automobile you want: Mercedes, Porsche, Jaguar, Toyota and, more recently, Tesla. They are all there.
One of the largest parking lots is owned by Caucasus Auto Import (CAI), a company that buys used cars at auction in the United States. The vehicles were often so badly damaged in accidents that they were written off by American insurance companies.
CAI says its “team of experts” in the United States will collect the cars in person, then arrange for their export by container ship, 10,000 km (6,000 miles) to a port on the Georgian sea coast. Black. The damaged cars will then be repaired by Georgian mechanics.
“Our company has made a significant contribution to the renewal of the Georgian automobile fleet,” says David Gulashvili, Deputy Director General of CAI. “When we started our business in 2004, Georgian automotive infrastructure was entirely produced in the Soviet Union, such as (Soviet brands) Lada and Vaz.”
He says his company responded to “a strong demand for vehicles produced in the West”. Today, the company has 600 employees.
Many cars from the United States are not in good condition when they arrive in Georgia.
Last year, Georgia imported $3.1 billion (£2.4 billion) worth of cars, according to official figures. It then exported vehicles worth $2.1 billion, mainly to the former Soviet republics in the Caucasus and Central Asia. Automobiles are actually Georgia's second largest export by value, after copper ore.
In the huge Rustavi car market, curious customers are looking for a good deal. Every car has a card inside its windshield showing the price, engine size and date of manufacture.
Alisher Tezikbayev came here from Kazakhstan. He and a group of his friends explore the Toyota section.
“We have been re-exporting cars from Georgia for about 3.5 years. We send cars to Kazakhstan and organize car tours when customers come to Georgia to choose their own car,” says Mr. Tezikbayev, who posts videos to his 100,000 followers on Tik Tok.
Georgia once exported used American and European cars to its northern neighbor Russia, with which it shares a border. But this has officially stopped since Russia invaded 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 automobiles imported from the United States or Europe to Russia and Belarus.
And Georgian officials have long denied that the country was complicit in helping Russia circumvent trade embargoes.
However, a recent investigation by Georgian media outlet Ifacti revealed numerous loopholes exploited by an army of car dealers on both sides of the Russian-Georgian border.
David Gulashvili says his company no longer does business with Russia. “From the first day of the war, we restricted any type of transaction from Russia, any type of export to Russia. You won’t see a single car exported by Caucasus Auto Import to Russia.”
However, he adds that there is no mechanism to control the final destination of cars re-exported to other countries.
And since Russia invaded Ukraine, used car exports to Kazakhstan, Kyrgyzstan and Armenia, all of which are members of the Russia-led customs union, have increased sharply.
This means that a vehicle registered in one of these countries can be driven in Russia with minimal fees.
Figures from the Georgian National Statistics Agency suggest that cars are indeed being transported to Russia. It states that in 2022, Georgia exported 7,352 used cars to Kazakhstan, while in 2023 the number was 39,896, a five-fold increase.
The Georgian used car market is said to be favored by its geographical location.
As the geopolitical machinations continue, the underlying success of Georgia's used auto industry can be explained by its geography. It has access to Europe via its Black Sea ports and to Central Asia via Baku, on the Caspian coast of neighboring Azerbaijan.
Another key element is the affordable cost of labor when it comes to repairing salvaged cars.
“These cars that were damaged in the United States, most of the time it is not profitable to rebuild them in the United States,” Mr. Gulashvili says.
“This is due to the cost of human resources, service costs which are much higher and the legal costs required to get these cars back on the road, a process which is time consuming and very expensive.
“In the United States, rebuilding a car and making it legal again takes six months and say $5,000. It takes $1,000 and a month in Georgia to repair the same car.
In a vast warehouse on the outskirts of Tbilisi, Zaza Andashvili looks at a car engine mounted on a specialized stand. The mechanic shows the cylinders he has just cleaned.
“The engine is the heart of the vehicle. Just like humans, if your heart stops working, you die. It's the same with cars: if the engine stops working, the car dies.
Mr. Andrashvili has been repairing car engines for almost 30 years. “Before, we learned through books, there was no Internet then,” he says.
Next to Mr. Andrashvili's workshop, there is a clicking sound. Roma and his apprentice Boris specialize in bodywork repair.
With a panel beater, Boris reshapes the near side wing of a mutilated automobile. Roma, in his brown T-shirt with USA written on the front, says he's been fixing cars for 50 years.
“Mercedes has the best metal, Volvo and Toyota are also good, but on some cars the body is so thin it looks like a piece of paper,” he says.
Mechanic Zaza Andrashvili has been repairing car engines for almost three decades
While most cars imported into Georgia are gasoline or diesel, Mr Gulashvili says there is a rapidly growing demand for electric vehicles, and particularly hybrids.
“Approximately 30% of the cars we currently offer are hybrids. It's not fully electric, but it's a hybrid like the Toyota Prius. The growth rate is extraordinary, it is around 300 to 400% from one quarter to the next.
The biggest resale market for Tesla, Mr. Gulashvili adds, is Ukraine, where it employs 100 people.
“It’s very expensive and very risky, but we’re still trying to gain ground there. We also import a lot of vans to Ukraine, which are used to fight against Russia.”
