How Georgia is Fueling the Flow of U.S. Used Cars to Russia Despite Sanctions
In the shadow of geopolitical tensions, the South Caucasus nation of Georgia has emerged as a pivotal hub in the global used car trade, with vehicles sourced primarily from the United States. A significant number of these cars are making their way into Russia, despite sanctions imposed following the country’s invasion of Ukraine. This complex network, built on Georgia’s strategic location and its well-developed car repair industry, is reshaping the flow of goods in the region and spotlighting the challenges of enforcing international trade restrictions.
On the outskirts of Rustavi, an industrial town just outside the capital, Tbilisi, lies one of the world’s largest open-air car lots. Spanning an area equivalent to more than 40 football fields, it is packed with thousands of vehicles up for sale—everything from Mercedes-Benz and Jaguars to more recent models like Teslas. Many of these cars, damaged in accidents in the U.S. and written off by insurance companies, are imported into Georgia to be repaired and resold. Caucasus Auto Import (CAI), one of the largest players in the market, has turned the trade of damaged U.S. cars into a billion-dollar business.
CAI’s deputy CEO, David Gulashvili, explains how the company sources these vehicles directly from auctions in the U.S., arranges for their shipment to Georgia’s Black Sea coast, and oversees their restoration. “We’ve helped transform the automotive landscape here in Georgia,” says Gulashvili. “Back when we started in 2004, the Georgian car market was filled with Soviet-made vehicles like Ladas and Vaz models. Today, there’s a massive demand for Western cars.”
Georgia has capitalized on this demand, importing $3.1 billion worth of vehicles in 2023, according to official data. The country’s ability to repair and re-export these vehicles—often to other former Soviet republics—has made cars Georgia’s second-largest export after copper. The Rustavi car market has become a magnet for buyers from across Central Asia and the Caucasus. Alisher Tezikbayev, a businessman from Kazakhstan, is one such buyer. On a visit to Rustavi’s sprawling car lots, he and his friends are scouring the market for Toyota models to re-export back home. “We’ve been re-exporting cars from Georgia for about 3.5 years,” Tezikbayev says, posting a video of his finds to his 100,000 TikTok followers.
Georgia’s Role in the Russian Car Market Despite Sanctions
Before the Russian invasion of Ukraine, a significant portion of these re-exported cars went north to Russia. In 2021, Russia was one of Georgia’s primary destinations for used cars. But when the West imposed sanctions on Russia after its 2022 invasion of Ukraine, Georgia officially halted car exports to its northern neighbour. In September 2023, the Georgian Revenue Service announced that it would restrict the re-export and transit of automobiles imported from the U.S. and Europe to Russia and Belarus, in line with the latest sanctions.
Despite this official stance, the reality on the ground is more complicated. A recent investigation by the Georgian media outlet Ifacti uncovered several loopholes in the sanctions regime, allowing used cars to continue flowing into Russia. While Georgia may no longer directly export vehicles to Russia, re-exports to countries in the Russia-led customs union—Kazakhstan, Kyrgyzstan, and Armenia—have skyrocketed. Cars registered in these countries can then be driven into Russia with minimal tariffs, effectively bypassing the sanctions.
According to Georgia’s national statistics agency, the country exported over 39,000 used cars to Kazakhstan in 2023, a fivefold increase from the 7,352 vehicles sent in 2022. This sharp rise suggests that many of these cars are ultimately destined for Russia, though they officially enter through Kazakhstan or other customs union countries.

A Thriving Industry Built on Georgia’s Strategic Position and Low Labor Costs
While the geopolitical implications of Georgia’s car trade are making headlines, the underlying success of its second-hand car industry can be attributed to its favourable geographic position and low-cost labour market. Georgia’s access to both European and Central Asian markets, via its Black Sea ports and its proximity to Azerbaijan’s Caspian coastline, makes it an ideal transit hub for global trade. At the same time, Georgia’s affordable labour allows damaged cars from the U.S. to be repaired at a fraction of the cost it would take in America.
“These cars, which are often severely damaged in the U.S., don’t make economic sense to rebuild there,” explains Gulashvili. “The cost of labour, service, and the legal requirements to get these cars roadworthy again are extremely high in the U.S. What might take six months and $5,000 to repair in America can be done in one month and for $1,000 here in Georgia.”
This cost-effectiveness, combined with Georgia’s well-developed network of skilled mechanics, has fueled the country’s used car market. In Rustavi’s industrial zone, skilled workers like Zaza Andreashvili repair engines with precision, reviving vehicles once written off as total losses. “The engine is the heart of the car,” says Andreashvili. “If it fails, the whole car fails.” Andreashvili has been working in auto repairs for nearly three decades and learned his trade long before the internet made information easily accessible.
Alongside him, mechanics like Roma, who specializes in bodywork, painstakingly restore vehicles with damaged frames. “Mercedes has the best metal,” Roma says. “But some cars are built with such thin body panels that they’re like paper.” The demand for these repairs is constant, driven by the large volume of cars arriving from the U.S.
The Growing Demand for Hybrid and Electric Vehicles
While Georgia’s used car market has traditionally been dominated by petrol and diesel vehicles, there is a growing shift toward hybrid and electric cars. Gulashvili notes that about 30% of the vehicles now being imported by CAI are hybrids, with models like the Toyota Prius becoming increasingly popular. The demand for electric cars, particularly Teslas, is also on the rise.
Interestingly, Ukraine has become one of the largest markets for re-exported Teslas. Despite the ongoing conflict, CAI has a dedicated team in Ukraine focused on importing and selling both Teslas and pickup trucks—vehicles that are not only used for civilian purposes but, in some cases, play a role in Ukraine’s defence efforts against Russia.
Challenges Ahead Amidst Geopolitical Tensions
As Georgia’s used car industry continues to flourish, questions remain about how long the current model can sustain itself. The increasing scrutiny of trade routes into Russia, combined with the growing complexity of international sanctions, could impact Georgia’s car export business. For now, however, Georgia’s strategic position and ability to repair and re-export vehicles cheaply have ensured its place as a key player in the global used car trade.
While international sanctions are reshaping the flow of goods, Georgia’s second-hand car industry is booming, and for now, vehicles from U.S. auctions will likely continue making their way into Russia – albeit through circuitous routes.