Gas Guzzlers Still Kings of Russia's Roads

MTDespite their huge appetite for ever-more expensive gas, SUVs like this Hummer continue to be popular for their ability to park and go almost anywhere.
As American automakers ponder record losses due to the falling popularity of trucks and SUVs, larger cars are breaking sales records in Russia.

May was the first month since 1991 that a sedan outsold the popular Ford F150 truck in the United States, indicating that the love affair between Americans and gas-guzzling automobiles may be ending. U.S. automakers like General Motors, Chrysler and Ford, which have traditionally relied on strong truck sales, are feeling the strain of declining sales as people switch to more fuel-efficient Asian models.

Meanwhile, Ford's sales in Russia jumped 36 percent in May to 18,600 vehicles. GM is also reporting explosive growth of 69 percent in Russia during the first quarter of 2008, including a 60 percent growth in sales of its heavy off-road Hummer vehicles. According to Autostat agency, the share of SUVs in foreign-made car sales in Russia has been steadily increasing for several years, reaching 18.2 percent at the end of 2007, a 3 percent increase over 2006.

The popularity of larger cars in Russia is growing despite rising gas prices, which averaged an equivalent of $3.97 per gallon for 95 octane fuel in June.

Alexei Biryukov bought his Hummer H2 at the beginning of 2008. It was his first car purchase and a completely irrational one, he said. "My soul wanted something festive," said Biryukov, "I like its capabilities and the fact that it's unusual." Biryukov said he usually drives a corporate car to the office, but when he is in a bad mood, he takes the Hummer. The price of feeling unhappy: 4,000 rubles per week to fill up the H2, which weighs almost 3 tons and has gas mileage of about 12 mpg, according to Motortrend.

The Hummer made a splash in Moscow a year ago with an aggressive advertising campaign. "Out of the way!" snarled the caption on one of the roadside billboards featuring a shiny black Hummer airborne against black background. Below, the stop-and-go traffic inched along Leninsky Prospekt, a major thoroughfare in southwestern Moscow.

Ironically, traffic jams and parking shortages are actually working in favor of SUV models, as drivers in dense cities consider cars with a higher clearance more useful for circumventing accidents and parking on the sidewalk. "Street curbs don't stop me now," said Marina Kapralova, who has recently switched from a small car to a Toyota Rav4.

Russians who opt for SUVs consider them a safer and more convenient alternative because of the better view as well as the bigger size, which creates a greater presence on the road.

"Other drivers let me change lanes in front of them more often," said Kapralova.

"Russia is becoming an important market for foreign companies selling SUVs, so they are paying more attention to marketing events geared for that purpose," said Sergei Udalov, deputy director of Autostat.

One selling point for SUVs is the low quality of Russian roads, a fact frequently stressed by advertisers. Chevrolet launched a campaign late last year for one of their larger SUVs, inviting people to access a special web site and post photos of "combating roadless conditions" in Russia, such as potholes, deep puddles, and muddy surfaces.

Dacha owners say roads in the Russian countryside are bad enough to merit an SUV. "I drive over potholes in a breeze when I go out of town," Kapralova said.

Though the gas bill, which for Kapralova reaches 1,000 rubles per week, is a negative aspect of SUV ownership, wealthier car buyers appear to be ready to keep paying. The price for 95 octane gasoline went up to 24.7 rubles per liter in June, an increase of over 17 percent from the beginning of the year. But so far, it doesn't bother Hummer owner Biryukov. "Maybe I'll start seriously rethinking the Hummer if gas prices double, but I hope they don't," he said.

Fuel efficiency is not a financial concern for Russians who opt for premium SUVs, such as models from the Land Rover brand, which start 1.1 million rubles. "Our clients are only interested in gas mileage because they don't want to waste time on pit stops, not because they want to save money," said Elena Gorelova, director of Land Rover sales at the Musa Motors dealership. Land Rover is one of the more successful brands in the Russian market, with sales growing by 63 percent in the first quarter of this year. In the same period, registrations of Land Rovers fell by 33 percent in the company's native Great Britain.

The public image of the SUV as inefficient and wasteful, which has contributed to declining sales in Europe and North America, has not yet spread to Russia. Russians are not interested in how a particular model impacts the environment, Gorelova said. "People think a car is 'ecological' if you can't smell diesel exhaust fumes while you are driving," she said, adding that environmental awareness will probably hit Russians in due time.

But with environmental concerns not an issue for the moment, large cars continue to increase in popularity. Their image is boosted by perceived safety benefits, a more comfortable ride, and their representation of a higher social status.

"Most of the car purchases are made using the following criteria: image, style, and confirmation of status," said Elena Filippova of Auto.ru, an internet portal that publishes about 140,000 sales ads daily, most of which are for used cars. Because of these criteria, the car preferences in Russia are not the same as elsewhere.

"In Europe, the most likely preference would be a utilitarian diesel hatchback with a stick shift; an American would look at how much money he has and what he needs from the car, paying less attention to the design and the car's interior. A Russian prefers a large and powerful car with an automatic drive and the maximum of additional options," said Anna Kapitonova, PR-manager of Chrysler Russia. "In Russia, the car is still more than just transportation," she added.

Gorelova of Musa Motors agreed. "In this city, the way people perceive you is extremely important," she said, "and for Russians, their car is their second identity."