For the snootiest Russians, it's 'year of the American automobile'

MOSCOW — MOSCOW -- Russia's nouveaux riches, eager to proclaim thei status, are crowding the streets with Volvos, Mercedes and BMWs. But in this rarefied company, one name is emerging as the snootiest and most elegant.

It's Detroit, and its cars are becoming the ultimate in cachet.


If the message has somehow been missed back in the United States, Russians have heard it loud and clear: "Buy American."

"This will be the year of the American automobile," says a confident Alexei Y. Krilov, director of Forward, a company selling Dodge Caravans, Ford Mustangs, Cadillac Sedans de Ville and Lincoln Town Cars in the heart of Moscow. "Performance, engineering -- they have it all. And they handle better than European or Japanese cars."


The desire for things American once satisfied by blue jeans and sneakers now requires horsepower. As a result, Moscow's car market has gone wild.

A Dodge Caravan that costs under $15,000 in Baltimore goes for $38,000 here. Mr. Krilov offers a shiny Ford Taurus sedan for $42,000, a nifty Lincoln Grand Marquis for $46,800 and a very up-market Lincoln Town Car for $55,800 -- all prices more than twice as high as in Maryland.

American cars are displayed in grandeur on the first floor of Detski Mir, a Moscow children's department store. The big old store, looking for a sure-fire way to make enough money for a billion rubles' worth of renovations, hit upon an answer: sell American cars.

The first floor was cleared to accommodate two huge display cases, where the cars pose like movie stars under bright lights -- and behind locked glass doors.

The price tags on the American cars would seem to be out of reach for the average Russian. Translated into rubles, the Dodge Caravan costs 17 million -- in a country where the average person earns 10,000 rubles a month.

But while the vast majority of Russians have been plunged into deep poverty by the collapse of the economy, a very few -- the clever and the criminal -- are making money, and lots of it.

The honest and industrious take regular trips to China or Poland or Turkey where they buy cheap jogging suits, shoes, coats, stockings, underwear, lipstick, liquor, candy, cigarettes and more.

They sell all of this at a tremendous mark-up from low-rent kiosks put up on street corners -- avoiding high overhead and the bureaucracy.


The criminal -- the wealthier of the nouveaux riches -- sell drugs or government property, high-profit items. No one, it seems, is manufacturing anything, only selling.

These new entrepreneurs are not about to put rubles in the bank, only to have them spirited away overnight by inflation. So they buy something precious -- an American car.

"If you buy an American car, that shows right away what kind of standard of living you have," says a 39-year-old kiosk owner. "Everyone knows how expensive they are."

Says Mr. Krilov: "For many years our people were deprived of quality. But they know it when they see it, and when they see it, they want to have it."

Fighting over Cadillacs

Mr. Krilov's firm, which opened unadvertised Sept. 15, is selling an average of one American car a day. Mr. Krilov carries Mercedes-Benzes, too, selling a sedan for about $50,000. But somehow they don't excite the same passions.


"There was a nasty argument yesterday between two people who wanted to buy our last Cadillac," says Mr. Krilov, who was a police captain before he went into the car business. The guy with his money out first won.

The other day, passers-by gawked through the glass at the open door of a Lincoln. The interior seemed more expansive than most Russian living rooms; the armrest was as big as a seat in a Russian car; the buttery leather upholstery could have covered Nebraska.

"They're beautiful," sighed an 18-year-old soldier named Volodya, staring at another American car. He could barely afford a free look on his army pay of 150 rubles a month.

Customers are lined up, Mr. Krilov says, for the Ford Explorer and Jeep Cherokee -- all loaded with extras. "What could you get for $14,000?" he asks rhetorically. "Maybe an engine and wheels. But if you want a real car, if you want your computer, your fax and your telephone, it will cost you about $50,000."

He says prices are so high because of shipping and a recently imposed 25 percent import duty. "And the third reason is the car market is far from being saturated," he says -- in other words, it's a seller's market.

Competition emerges


But competition is springing up. On Tverskaya Street, within walking distance from the Kremlin, a company called Trinity Motors opened several months ago, selling General Motors cars.

And what was a vacant lot on Moscow's busy ring road Friday evening was an American-style car lot yesterday morning: Pennants flapped in the air, a big sign said Victory Auto Sales (in English, of course), and close to a dozen American cars were parked behind a fence that was quickly being installed.

A half-hour drive from the center of the city, U.S. Impex from Brooklyn, N.Y., is selling Fords and running an American-style repair shop. Alexander Gorn, a partner, says the firm has been selling 15 to 20 cars a month -- without any advertising and at DTC $35,790 for a Mustang and $30,480 for a Taurus.

When Impex set up business in April, Mr. Gorn says, the smaller Tempo was offered, too. It didn't sell. "No one wants a Tempo," he says. "Only the rich can afford a foreign car here, and they want a big, luxurious car."

Local cars are a joke, says Mr. Gorn, who emigrated to the United States 13 years ago from St. Petersburg. "Russian-made cars are inferior. Aesthetically, it's a piece of junk."

Even the wealthiest Russians are at a disadvantage as consumers. The Dodge Caravan that sells for $38,000 here could be ordered from Finland for about $24,000 -- including the 25 percent tax. But the Finnish car dealer expects a check or credit card. Russians don't have checking accounts; they don't have credit cards.


So they must buy locally, from a firm willing to accept a local bank transfer or suitcases of rubles.

The high cost of business

Mr. Gorn says the cost of business is high. "What you can resolve with one phone call in the United States takes weeks here," he says. "In the U.S., one person handles the workload of three or four people here. And things just don't work."

Impex happily finished an auto show earlier this month with a half-dozen orders in hand. For the next 10 days, the company's phones didn't work. Prospective buyers thought they had left town.

In an attempt at market research, Mr. Gorn asked the motor vehicle department how many Volvos were registered here last year. He was told 18. Yet a casual observer sees hundreds of new ones on the road.

Mr. Gorn, who loves Fords and happily drives in New York -- where he's on the road for two to three hours a day -- spends a week of every month in Moscow, where he has two company cars, a Taurus and an Aerostar.


He has had plenty of time to observe the driving style here -- a kind of cross between Dodge-'em and Chicken. He has marveled at Russia's enormous potholes, the poorly lighted streets and the general refusal of traffic engineers to permit any kind of turns.

And he has no intention of ever getting behind the wheel of a car here. "I never drive here," Mr. Gorn says firmly. "You'd have to be crazy."