Crashed American Cars Find New Life in Russia via Georgian Auto Market

The South Caucasus nation of Georgia has grown into a multi-billion-dollar center for the international used car market, with vehicles mostly sourced from the United States and many ending up in Russia. In Rustavi, a major hub near the capital Tbilisi, massive open-air car parks showcase thousands of used cars—from Porsches and Jaguars to Toyotas and Teslas. 

Much of this stock originates as damaged vehicles written off by American insurance companies and then imported by Georgian firms like Caucasus Auto Import (CAI), where they are repaired and resold.

From Wrecks to Re-Exports

Georgia imported $3.1 billion worth of vehicles last year and re-exported $2.1 billion, primarily to former Soviet republics in Central Asia and the Caucasus. Although Georgia ceased direct exports to Russia following the 2022 invasion of Ukraine, car exports to Kazakhstan, Kyrgyzstan, and Armenia have surged, thanks to a customs union allowing vehicles registered in these countries to enter Russia with minimal tariffs. For instance, exports to Kazakhstan alone rose from 7,352 in 2022 to 39,896 in 2023—a fivefold increase.

Sanctions and Loopholes

Despite Western sanctions barring vehicle exports to Russia, recent investigations revealed how car dealers exploit regulatory gaps to circumvent restrictions. Georgian officials and CAI assert that they have adhered to the sanctions, but there is currently no mechanism to track the final destination of re-exported cars. 

This loophole allows cars exported to intermediary countries to cross into Russia, where demand for affordable vehicles continues amid sanctions on new imports.

Georgia's car export business not only highlights the ingenuity of local dealers but also underscores the challenges of enforcing international trade restrictions effectively, especially with rising demand in markets constrained by political and economic barriers.