Boom Times in Russia: Who Really Won the Cold War?

May 30, 2008


My first trip through Russia was during the dark days of the old, Evil Empire. Flying into Moscow’s airport was a chilling experience, with few locals other than heavily armed, and exceedingly unfriendly soldiers watching your every move. Moscow’s roads were largely empty, but for the odd Lada and Moskvitch, almost certainly being driven by a senior government official or favored party apparatchik.

Those were the days, after all, when the idea of a consumer economy meant a single Pepsi machine located near the Kremlin – and a single paper cup that would be shared by everyone on the long line waiting for the machine to dispense its syrupy goodness.

These days, if you have the money, you can find plenty of Cristal champagne at the discos and fancy restaurants that seemingly pop up like mushrooms along Moscow’s increasingly crowded streets.

Forget the Moskvitch, and expect some big changes to Lada, which has formed a partnership with Nissan/Renault. Today’s increasingly affluent Russian consumers have access to virtually every automotive brand imaginable, and more are coming. The Nissan/Renault/Lada deal will result in a huge increase in vehicle available, as will a new General Motors plant. Though the country’s population is but a fraction of that in the world’s other boom markets, China and India, it seems like everyone wants a production presence on Russian soil.

The results are paying off, sales numbers for the first four months of 2008 indicate. Foreign brands are up 49 percent, with GM Chevrolet posting a 53 percent increase. Hyundai, a late entrant, scored a triple-digit, 108 percent gain, leading the charge by Asian makers. Among Europeans, Renault topped the sales charts and reported a 26 percent gain. Though still smaller, Peugeot also saw sales more than double against year-earlier numbers, while Volkswagen sales rose nearly 50 percent.

So, let’s see if I have this right: wWhen I first flew into Moscow, most comrades were walking or taking the bus. Now they’re buying cars and driving one of the world’s most vibrant consumer economies. Back here, in the U.S., we’re watching sales plunge and worried about the sinking economy. Care to remind me who won the Cold War?

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