Buying an Automobile in Russia
by John Q. Franklin
What to buy?
This is the question I find myself mulling over as I sit at my kitchen table, leafing through a set of catalogues and brochures given to me by eager salesmen. My recent acceptance of a part-time position as a professor with the Southern Federal University in Rostov-on-Don has resulted in an increase in my travels - often to places served irregularly by the bus or tram lines, or at awkward times of the day. While I am not adverse to a good brisk walk - for there are few activities more suitable for an English gentleman - the time has come for me to buy a car in order to move more freely around Russia.
While automobiles are hardly unusual in Russia, statistics indicate (depending upon the sources you wish to believe) that between one in seventy-five or one in a hundred Russians actually owns or has regular access to a personal automobile. Car ownership definitely remains the domain of the upper and middle classes. Lower class Russians, by contrast, almost always use the various municipal-operated transport options - buses, trams, or subways - or move around on bicycle or by foot. However, in the seven years I've lived in Rostov-on-Don, I have seen a new trend of automobile ownership emerging within the lower and middle class.
Some years ago, the Renault company, with a great deal of cost, set up a manufacturing concern known as the Moscow Compact Car Factory (or MZMA), which produces a local variation of the French 4CV. Citroen similarly acheived an entry into the Russian market with their associate VAZ (Volga Automobile Plant), locally manufacturing a variant of their comic-looking but even cheaper 2CV. To the surprise of most Russian industry leaders, MZMA and VAZ aimed their design and sales efforts not at the upper and middle class, but at the lower class - a decision ridiculed at the time by many financial experts, myself included. Fortuitously for Renault and Citroen, I was not a member of their executive board!
For a number of reasons, the French have enjoyed a privileged position within the Russian economy as a whole ever since the beginning of the Federation era. When Russia defaulted on wartime loans made by British financiers, London's financial influence and their confidence in Russian markets waned sharply, and even over the past twenty-five years, little has changed. American wartime loans, although lesser in value than their British equivalents, suffered a similar fate. With the German economic engine badly damaged by the Great War, the Paris Bourse - and to a lesser extent, Cleito's financial sector - stepped into the gap, establishing lasting financial ties that remain in place to this day. Petrograd's view of economics, as a rule, is both protectionist in nature and given to regular fits of socialist railing - which rarely comes to much, fortunately, but often rattles the nerves of the unprepared or inexperienced investor. The current investment situation favors entrenched businessmen who have forged longtime personal ties and the degree of personal fortitude necessary to ignore or overturn the vagaries of the government - and the French financiers are the only foreigners who have consistently stayed in the game. Along the way, they cultivate a deeper knowledge of the enigmatic (and, frankly, often obtuse) Russian economy.
Despite this depth of experience, it was the American Ford company which first broke into the Russian automobile market through a cooperative venture that formed NAZ (Nizhegorodsky Avtomobilny Zavod), located in the city of Nizhny Novgorod. NAZ built Russia's first passenger car - the unreliable NAZ-A, a variant of the Model A - before eventually upgrading to the much more modern and now iconic NAZ-M1, or "Emka". These vehicles, while relatively inexpensive to the eyes of Western Europeans, sold best to the upper middle class, which had few other purchasing options at the time.
Discerning Russian buyers have always had the alternative of imported British or German cars, but imported vehicles have their own associated costs. Many years ago, a protectionist left-wing Duma passed a law to charge import tariffs on foreign automobiles, regardless of manufacture, with the rates left to the control of the Auto Manufacturing Import Control Board, a bureaucratic body associated with the Ministry of Transport, but not placed under its direct control. This bureau, insulated from oversight, charged such a hefty rate on imported automobiles that foreign-built cars could never compete with their Russian equivalents in terms of price (with the taxes often coming to three or even four times the price of the vehicle itself). A foreign car thus became a powerful status symbol, and a lucrative black market rose to provide foreign (predominantly British and German) automobiles to Russian buyers. Indeed, for a period in 1941, automobile smuggling became the single largest source of income for the Russian mafia, and the government estimates that up to half of the foreign automobiles on Russian roads have been illegally smuggled into the country.
Although the anti-corruption crusaders have staged multi-prong attacks on the power of the Auto Manufacturing Import Control Board, it was Renault and Citroen (acting through the agency of their respective Russian subsidiaries) who launched the coup de main. Russian drivers now had the ability to buy "foreign" cars for domestic prices - or better. The well-equipped factories in Moscow and Volgograd are extremely busy filling orders.
Importantly, it's not just the upper-middle class who are buying cars now. Some enterprising Russians have pooled their resources in order to purchase a car which is shared jointly by multiple families. As a case in point, a year ago my closest neighbor bought a VAZ 2CV, sharing ownership with three other neighbors, including a pair of twin brothers who just finished their term with the army. The other three partners all claim a 20% stake, and share 20% of operating costs. Individually, none of them would have the money to buy and operate a car on their own, but by pooling their resources they have acquired a degree of mobility never before available to lower-class Russian workers. Their partnership is simplified since they all work the same shift at the shipyard, and can commute to work together each day - which in turn saves the four of them significantly in bus fares. They negotiate with each other for who gets the car on weekends; since my neighbor owns two of the five shares, he usually gets the first pick.
The rise in ownership and purchasing has sparked an occupation never before seen in Russia: that of the car salesman. There are now two working in Rostov-on-Don, and in my search for my first car, I visited them both. At the office of Ivan Miloradovich & Associates, the owner's younger brother Dimitri opened up to me for several hours about a number of topics. The Miloradovich brothers, Ivan and Dimitri, are salesmen affiliated with MZMA, and primarily offer Renault's Russianized variant of the 4CV, the so-called "Moskvitch." However, they also offer other vehicles, including the new "Volga" brand (by NAZ), imported German and British automobiles (for a price) and a range of motorcycles. Dimitri laughingly offered me a good deal on the most fastest motorcycle currently permitted for sale in Russia, an imported Vincent. "Perfect for an adventurous Englishman like yourself!" he joked. I demurred, recalling my many bicycle accidents in the country lanes of Northumberland. "In any case, I want something to keep out the weather," I pointed out.
The Miloradovich brothers have a garage filled with possibilities, and Dimitri assured me that, once I selected a vehicle, he could have it delivered within thirty days - even a Moskvitch, which still has a waiting list. "I have friends in Moskva," Dimitri acknowledges, "And between that and our affiliation, I can get you a Moskvitch in thirty days." Dimitri showed me a four-door Moskvitch sedan awaiting delivery to its owner, and let me sit in the driver's seat - but no test drive, since the vehicle only had thirty kilometers registered. My inspection showed that the Moskvitch was spartan and designed for the working man, but not being an automotive journalist let alone a mechanic, I had very few other observations about the quality. Dimitri sent me on my way with a dozen glossy brochures, all in Russian.
The next day I visited the Miloradovichs' competition and talked with young Fyodor Baratynsky and his wife Elisaveta, whose English was better than my Russian. Like the Miloradovichs, the sales group is a family affair. Fyodor's father Iosef started out as a truck mechanic, and in the early 1930s started selling NAZ-A vehicles on the side. As time went by, the elder Baratynsky took on a partner - Elisaveta's father, Ivan Yegorov - to sell more cars while he himself worked on the mechanical side. The elder Baratynsky has since retired, leaving his mechanic shop in the hands of Fyodor's cousin, while Fyodor himself prefers selling cars to fixing them.
Fyodor started by showing me the NAZ N20 'Rodina', a new four-door sedan that's part of the new Volga brand, and the VAZ 2CV, the Russian-built variant of the French Citroen - simpler, even, than the Moskvitch I'd looked over the day before. I drove them both to evaluate their performance, and preferred the Rodina; but the low price of the 2CV was tempting. It's easy to see why this simple vehicle has sold so well in Russia, particularly due to the absence of easy competition from Austin and Auto Union. The 2CV's low price makes it a viable alternative to a mule and cart, thus tempting the Russian peasant farmers who would never have dreamt of owning a personal automobile.
After the test drive, Fyodor showed me several other vehicles, including a secondhand Austin. I asked him whether the car had been smuggled into Russia or not. "Probably not," he said. "With foreign vehicles, you'd need to look close at Skodas and anything from Germany. The mafia buys those cars legitimately from dealers - in Poland, Czechoslovakia, sometimes even Germany itself - and then changes the tags and registrations before driving them across the border. German cars are believed to be highly reliable, and are thus very desirable to smuggle. British cars have about the same desirability, but they're harder to buy in Eastern Europe." Fyodor showed me a trick to distinguish between them. "The Import Board issued legitimacy certificates like this ones; the mafia copied them, but used better paper. After a few years, the government certificates fade and yellow, but the faked mafia certificates are still white." He showed me the Austin's faded import certificate, which claimed the car was imported to Russia in 1942 for a price that I found staggering.
After looking over the cars with Fyodor, I spent another hour talking to his wife Elisaveta, who wanted to practice her already excellent English. Educated for two years in England, Elisaveta now keeps the books while her father and husband focus on sales. Elisaveta told me about some recent developments with the Russian automobile market. In several regions, particularly Karelia, Estonia, and the city of Petrograd, the Russian government has made an unorthodox agreement to remove all but a few minor import tariffs on Nordish-built Saabs and Volvos. The senior director of the once-mighty Auto Manufacturing Import Control Board protested - and was summarily dismissed. "The government is using Estonia as a test market for the entire Federation, evaluating whether or not Russian manufacturers can compete with foreigners without any protective tariffs," Elisaveta pointed out. "The exciting news is that it appears we can."
At the forefront of the defense is NAZ, one of the first companies to mass-manufacture cars in Russia. The new N20 Rodina that I test-drove is aimed at the buyers who want something more than rebadged French 'cars for the masses': it is the first car sold in Russia with turn signals, electric wipers, an FM radio, and an electric heater. It directly addresses the concern, widely held in Russia, that indigenous vehicles are somehow lacking in quality or modernity compared to their foreign counterparts - particularly German vehicles, and to a lesser extent Nordish and British cars. AMO ZiL - the firm responsible for manufacturing Russia's vast fleet of military trucks - is similarly responding by upgrading the quality of its civilian offerings, but focuses on the high-end market share, well outside the limit of my savings.
After counting my rubles and weighing all the options, I returned to meet with the Baratynskys and put my money down on a VAZ-built 2CV - although I was sorely tempted by that N20 Rodina. For my purposes, it ought to serve me well, even if it has only basic amenities. Once it's delivered two weeks from now, I'll join the new generation of Russians on the increasingly-busy roads.
John Q. Franklin is an English writer and financial expert living and working in Rostov-on-Don. He is part of the Faculty of Economics at the Southern Federal University.
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