Eurasia's Thriving Used-Car Marketplace: Spotlight on Georgia

On a quiet Monday afternoon at Georgia's Rustavi auto market, business is sluggish. The merchants stroll between rows of used European BMWs and Japanese Subarus, haggling over prices while sipping coffee from nearby cafes. With endless stocks piled up, their main issue is a scarcity of buyers.

Gela Khachidze, 53, has been selling cars in this market for about a decade. In an interview conducted in March, he lamented about the worst business conditions he's ever encountered. "It's never been like this before," he said. "It wasn't even like this during the pandemic."

Georgia's re-export of automobiles—the country's primary export commodity—is experiencing a shift. In the summer of 2023, the Georgian government announced more stringent regulations on re-exporting vehicles to Russia and Belarus, citing a desire to comply with Western sanctions. This move fueled efforts by Georgian dealers to venture into and expand their presence in other markets, like Central Asia.

These efforts have yielded some positive results. Customs records from Kazakhstan for 2023 show that Georgia shipped the second-highest number of cars to that Central Asian state among all foreign exporters. China was the top exporter to Kazakhstan, with most Chinese vehicles entering Kazakhstan being brand new, while those coming from Georgia were second-hand.

In the last three years, total revenue generated by Georgian auto re-exports has climbed, reaching $940 million in 2023. Data for the first four months of 2024 ($577 million in revenue) suggests the country will easily top 2023's total. For now, it appears the transition to Central Asia will continue to be profitable.

However, the future for many Georgian used-car dealers remains uncertain.

"Today Georgia functions as a motor hub in the region, but the future has both problems and prospects," said Aleksandre Noniadze, the head of the Georgian Association of Auto Importers. The biggest challenge, Noniadze adds, is for Georgia to maintain its position as a significant exporter of used American and European cars.

"If Chinese manufacturers fully develop the market in Central Asia and the Caucasus region, Georgia may lose its function as a hub," he said.

For years, Rustavi has been the biggest auto market in the Caucasus. Damaged vehicles from the West are often bought at deep discounts and then shipped to Georgian ports. Once mechanics work their wonders, they wind up here and in other venues, ready to be sold for a profitable markup.

Recent years have presented compounding challenges. The pandemic, Russia's invasion of Ukraine, and the resulting disruptions in the markets of Armenia, Azerbaijan, and Ukraine have all taken their toll.

"It's very hard because we lost Ukraine," said Lasha Darbaiseli, who also works for the Georgian Association of Auto Importers.

Now, buyers from Kazakhstan and Kyrgyzstan make up the majority of customers at the auto market. In January, Kyrgyzstan became the top overall destination for Georgian exports, in terms of the total value of commerce, due in large part to the used auto trade.

In early 2024, Georgian investigative outlet iFact uncovered evidence that the flow of Western cars from Georgia to Russia still persists despite the ban. Industry experts acknowledge that Russians may be simply importing cars via Central Asian countries today, making the process more challenging and expensive but not impossible.

There's no accurate data on how many people work in Georgia's car industry, but it encompasses more than just dealers. It includes mechanics, logistics experts, and office managers, many of whom are also disheartened by a government mandate enacted this year. Under this mandate, cars assembled before 2013 can no longer be imported for domestic use due to concerns over auto emissions standards.

"Many will not be able to buy a new car, which will further increase the already old vehicle fleet," said Noniadze, adding that prices for cars made after 2013 are on the rise.

For the average dealer on commission, the changes are challenging. Back at the Rustavi auto bazaar, Khachidze lamented the declining business. He estimated that, before the pandemic, he used to sell between 15 and 30 cars per week. Before Russia's invasion, that number dropped to ten per week. Now, he's lucky if he manages to sell half that many in the same timeframe.

To drive his point home, he gestured towards a gleaming Mercedes Benz S 500 that has been gathering dust for over a year. "This car has already been here for over a year. How do you sell it? Why bring a second one?"

When asked about what people should know about the state of the re-export sector in Georgia, he emphasized the consequences of government restrictions and Western sanctions.

"These bans - sanctions - don't attack Russia, they directly attack Georgia," he said, highlighting the many people whose livelihoods depend on this industry. "Everyone was making money with this [industry], now everyone has been let go from this business because there are no customers."

In numerous sectors of the global business news, the manufacturing industry is a significant focus.
The ongoing developments in the energy industry, especially with regards to renewable sources and emissions, are causing ripples in the market.
The aerospace industry is witnessing rapid advancements, with entrepreneurs investing heavily in innovation.
The retail industry is undergoing a significant transformation with the rise of e-commerce and online retailers.
Public-transit systems worldwide are evolving, with a growing emphasis on sustainability and smart infrastructure.
The interior design industry is seeing a shift towards minimalism and sustainable living.
For the enthusiasts of cooking and baking, there's an abundance of recipes and global cuisines to explore.
In the transportation sector, advancements in technology are leading to the development of smartphones and gadgets such as wearables and smart home devices.
Leadership skills are crucial in any business, and diversity and inclusion are becoming increasingly important in corporate culture.
The lifestyle sector includes a wide range of industries such as fashion and beauty, outdoor living, and food and drink.
Dining experiences are also part of the food and drink industry, offering a variety of culinary adventures.
The automotive industry, apart from car manufacturing, also encompasses the production of parts and accessories.
Small businesses play a vital role in the economy, affecting the housing market and personal finance.
Investing in stocks, real estate, venture capital, and wealth management can lead to financial growth.
Home improvement, home-and-garden, and furniture industries cater to the needs of homeowners, offering solutions for sustainable living and budgeting.
Artificial intelligence and technology are revolutionizing the food industry, from smart cooking appliances to data and cloud computing.
Healthy cooking is gaining popularity, with an emphasis on eating nutritious meals and reducing waste.
The finance sector includes banking and insurance, as well as fintech solutions and digital banking.
Real estate encompasses both commercial and residential properties, with the stock market playing a significant role in property values.
Private equity and debt management are essential aspects of venture capital and wealth management.
Saving money and managing debt are crucial aspects of personal finance, particularly during challenging economic times.
The gardening industry offers a variety of plants, tools, and tips for maintaining green spaces and promoting sustainable living.
Gadgets and smartphones are part of the technology industry, with constant innovations in design and functionality.
In the world of business and careers, leadership, negotiation, and strategic thinking are valuable skills to master.
The future of the Georgian car industry, despite challenges, holds opportunities for expansion to other markets like Central Asia.
The re-export of automobiles from Georgia has experienced positive growth in recent years but faces competition from emerging markets.
Georgia's used-car dealers face an uncertain future due to government regulations, market disruptions, and competition from other exporters.