How the nation grew to become a hub for used vehicles | EUROtoday

The small South Caucasus nation of Georgia has grow to be a multi-billion greenback hub for the worldwide used automotive market. The automobiles are largely sourced from the US, and plenty of look like ending up in Russia.

On the dusty outskirts of Rustavi, an industrial city 20km (12 miles) southeast of Georgia’s capital Tbilisi, is an enormous space of open-air carparks.

Equivalent in measurement to greater than 40 soccer pitches, it hosts hundreds of automobiles up on the market.

You can discover just about any vehicle your coronary heart needs – Mercedes, Porsches, Jaguars, Toyotas and, extra not too long ago, Teslas. They are all right here.

One of the most important carparks is owned by Caucasus Auto Import (CAI), an organization that buys used vehicles from auctions within the US. The automobiles have typically been so badly broken in accidents that they’ve been written-off by American insurance coverage corporations.

CAI says that its “team of experts” within the States will choose up the vehicles in particular person, after which organize their export by container ship, 10,000km (6,000 miles) to a port on Georgia’s Black Sea shoreline. The broken vehicles will then be fastened by Georgian mechanics.

“Our company has contributed a lot to the renewal of the Georgian fleet of cars,” says David Gulashvili, CAI’s deputy chief govt. “When we started our business in 2004, Georgian automotive infrastructure was totally Soviet Union produced, like [Soviet brands] Lada and Vaz.”

He says that his firm has responded to “a lot of demand for Western-produced vehicles”. Today the agency has 600 staff.

Last yr, Georgia imported $3.1bn (£2.4bn) price of vehicles, in accordance with official figures. It then exported automobiles to a worth of $2.1bn, primarily to former Soviet republics within the Caucasus and Central Asia. Cars are actually Georgia’s second-largest export by worth, after copper ore.

Across the large automotive market in Rustavi, curious clients are looking out for a deal. Each automotive has a card on the within of its windscreen indicating worth, engine measurement, and date of manufacture.

Alisher Tezikbayev has travelled right here from Kazakhstan. He and a bunch of his mates are exploring the Toyota part.

“We’ve been re-exporting cars from Georgia for about 3.5 years. We send cars to Kazakhstan and organise auto tours, when clients come to Georgia to pick their own car,” says Mr Tezikbayev, who’s posting movies to his 100k followers on Tik Tok.

Georgia used to export second-hand US and European vehicles to its northern neighbour Russia, with whom it shares a border. But that has formally stopped on account of Russia’s invasion of Ukraine in 2022.

In September 2023, the Georgian Revenue Service introduced that, according to the then newest Western sanctions in opposition to Russia, it was proscribing the re-export and transit of cars imported from the US or Europe to Russia and Belarus.

And Georgian officers have lengthy denied that the nation has been complicit in aiding Russia’s evasion of the commerce embargoes.

Yet a latest investigation by Georgian media publication Ifacti confirmed quite a few loopholes exploited by a military of automotive sellers on either side of the Russian-Georgian border.

David Gulashvili says that his firm not has any commerce with Russia. “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 provides that there isn’t a present mechanism to watch the ultimate vacation spot for re-exported vehicles going to different nations.

And since Russia’s invasion of Ukraine there was a steep rise in exports of used vehicles to Kazakhstan, Kyrgyzstan and Armenia – all of that are members of the Russia-led customs union.

It signifies that a automobile registered in any of these nations will be pushed to Russia with minimal tariffs.

Figures from Georgia’s nationwide statistics company counsel that vehicles are certainly occurring to Russia. It says that in 2022 Georgia exported 7,352 used vehicles to Kazakhstan, whereas in 2023 the quantity was 39,896, a greater than five-fold enhance.

While the geopolitical machinations rumble on, the underling success of Georgia’s second-hand automotive business will be defined by its geography. It has entry to Europe by way of its Black Sea ports, and to Central Asia by way of Baku, on neighbouring Azerbaijan’s Caspian coast.

Another key element is the inexpensive value of labour in relation to fixing salvaged vehicles.

“These cars that have been damaged in the US, most of the time it does not make economical sense to rebuild them in the US,” says Mr Gulashvili.

“This is because of the cost of human resources, service costs are much higher, and the legal costs to get those cars back on the road, is time consuming and very expensive process.

“In the US rebuilding of a car, and making it legal again, takes six months and let’s say $5,000. It takes $1,000 and one month in Georgia to fix the same car.”

In a sprawling warehouse on the outskirts of Tbilisi, Zaza Andreashvili leans over a automotive engine fastened to a specialised stand. The mechanic factors to the cylinders, which he has simply cleaned.

“The engine is the heart of the vehicle. Just like humans, if your heart stop working, you die. The same with the cars, if engine stops working, car dies.”

Mr Andreashvili has been repairing automotive engines for practically 30 years. “We used to learn through books, there was no internet at the time,” he says.

Next door to Mr Andreashvili’s workshop, there’s a banging noise. Roma and his apprentice Boris concentrate on physique work repairs.

With a panel-beater, Boris is reshaping the close to aspect wing of a mangled vehicle. Roma, in his brown t-shirt with USA written within the entrance, says he is been repairing vehicles for 50 years.

“Mercedes has the best metal, Volvo and Toyotas are also good, but with some cars the body work is so thin it’s like a piece of paper,” he says.

While most vehicles imported into Georgia are petrol and diesel-powered, Mr Gulashvili says there’s a fast-growing demand for electrical, and significantly hybrid automobiles.

“About 30% of the cars we are bringing right now, is hybrid. It is not fully electric, but it’s hybrid like Toyota Prius. The growth rate is off the charts, it’s like 300 – 400% rate quarter over quarter.”

The greatest re-sale marketplace for Teslas, provides Mr Gulashvili, is Ukraine, the place he has 100 members of employees primarily based.

“It’s very expensive and it’s very risky, but still we’re trying to get traction there. We are also importing a lot of pickup trucks into Ukraine, which are used to fight against Russia.”