Georgia Emerges as Key Hub for US Car Exports, with Many Vehicles Ending Up in Russia

Georgia, a small South Caucasus nation, has grown into a significant player in the global used car market, importing billions of dollars’ worth of vehicles primarily from the United States, BBC reports.

Many of these vehicles, though officially destined for neighboring countries like Kazakhstan and Armenia, appear to be making their way into Russia, despite sanctions imposed on car exports to the country following the start of the war with Ukraine.

Located near Georgia’s capital, Tbilisi, the sprawling Rustavi car market is a center for this trade. Covering a vast area, it houses thousands of used vehicles, from luxury brands such as Mercedes and Porsche to more common models like Toyota. Much of the stock is sourced from US auctions, often involving cars that were written off by American insurance companies after accidents. Once imported, these damaged vehicles are repaired by local mechanics before being sold to buyers across the region.

Caucasus Auto Import (CAI), one of the largest firms involved in this trade, has been instrumental in transforming Georgia’s car market, importing used US cars since 2004. According to the company’s deputy chief executive, David Gulashvili, the lower costs and quicker turnaround times for repairs in Georgia make it a favorable location for rebuilding damaged vehicles.

While Georgia used to export cars directly to Russia, that practice was halted following Western sanctions. In September 2023, the Georgian government restricted the re-export of US and European vehicles to Russia and Belarus. However, a rise in exports to countries within Russia’s customs union, such as Kazakhstan and Kyrgyzstan, has created new channels for vehicles to reach Russia. Georgian media investigations have revealed that many cars are still making their way into Russia through these indirect routes, facilitated by customs loopholes.

Despite these developments, Georgia’s car industry continues to thrive, largely due to its strategic location and the growing demand for hybrid vehicles. With affordable labor and access to both European and Central Asian markets, the country’s role as a major hub in the used car market seems poised to grow further.