Georgia has quietly emerged as a multibillion-dollar hub for the international used car market, which primarily supplies vehicles from the United States, many of which end up in Russia. In the suburbs of Rustavi, near Tbilisi, there are vast outdoor parking lots, covering more than 40 soccer fields, with thousands of vehicles for sale, including brands such as Mercedes, Porsche, Jaguar, Toyota, and even Tesla.
Caucasus Auto Imports (CAI), one of the largest car dealers in the area, is specialized in buying severely damaged cars from U.S. auctions that have been written off by insurance companies. Their team in the United States is responsible for buying and exporting these vehicles to Georgia, where local mechanics repair them.
According to CAI’s deputy CEO David Gulashvili, the company has significantly modernized Georgia’s car fleet since its inception in 2004, responding to the growing demand for vehicles produced in the West and where there are now 600 people employed.
According to official statistics, Georgia imported cars worth $3.1 billion (2.4 billion £) last year. It then exported vehicles worth $2.1 billion, mainly to the former Soviet republics of the Caucasus and Central Asia. As a matter of fact, cars are Georgia’s second largest export by value, after copper ore.
Previously, Georgia exported secondhand U.S. and European cars to Russia, its northern neighbor, but this practice has stopped after Russia invaded Ukraine in 2022. In September 2023, the Georgian Revenue Agency announced restrictions on the re-export and transit of cars imported from the United States or Europe to Russia and Belarus, in accordance with the latest Western sanctions. Georgian officials have consistently denied any involvement in allowing Russia to bypass these trade embargoes.
David Gulashvili stated that his company has completely ceased trade with Russia, emphasizing: “From day one of the war we have restricted any kind of transactions from Russia, any kind of exports to Russia. You will not see a single car exported by Caucasus Auto Import to Russia.” However, he noted that there is currently no mechanism in place to track the final destinations of re-exported cars sent to other countries. Following Russia’s invasion of Ukraine, there has been a significant increase in used car exports to Kazakhstan, Kyrgyzstan, and Armenia, all part of the Russia-led customs union, allowing vehicles registered in these countries to enter Russia with minimal tariffs.
The prosperity of Georgia’s used car industry is due in large part to its strategic geography and affordable labor to repair recovered vehicles. The country benefits from access to Europe through Black Sea ports and to Central Asia through Baku, Azerbaijan. David Gulashvili notes that it often does not make economic sense to rebuild damaged cars in the United States because of the high labor and legal costs, with repairs taking six months and about $5,000, compared to one month and $1,000 in Georgia.
Although most cars imported into Georgia are gasoline and diesel powered, there is a significant surge in demand for hybrid and electric vehicles, with hybrids accounting for about 30 percent of current imports. David Gulashvili reports a surprising 300-400% quarter-to-quarter growth rate for hybrids, particularly for models such as the Toyota Prius. In addition, Georgia is a key market for Teslas, especially in Ukraine, where Gulashvili employs 100 people. Despite the fact that importing vehicles into Ukraine is expensive and risky, the company is also bringing in pickup trucks, which are used in the war against Russia.
