MOSCOW -- The two-story dealership off Varshavskoe Highway in Moscow's sprawling southern suburbs has just about every General Motors brand a Russian buyer could desire.
On the ground floor, shiny new Chevrolets sit next to more expensive Opels. Upstairs, there are Cadillacs, which soon will share space with Saabs.
And there are Hummers.
Or there used to be Hummers.
Where four H2s used to sit, now there is only a gray Italian-ceramic floor. A receptionist sits at a long counter under a Hummer sign, taking telephone calls and pouring coffee for potential Hummer customers. The dealership has Hummer brochures, leather couches and a flat-screen TV.
But no Hummers.
"We're all sold out. I couldn't give you one today if you had the money," says Yuri Soloviov, sales director at Klarus Trading, an Opel-Chevrolet-Cadillac-Hummer dealership here, one of three Hummer stores in a city of 10 million people.
"One month we sold 12. That was our record. I just can't keep them in."
If a customer wants to see an H2, Soloviov's team must take them through a winding passageway of hallways and doors that eventually leads to a multilevel parking garage. There sit three or four black and red Hummers waiting for owners to take delivery.
"A customer can see them here, but they can't have them; they have to wait," says Soloviov, 40, with a shrug of his shoulders.
In search of 'inomarka'
This is life in the new Russia, where one dealer can sell as many Hummers a month as GM's monthly average in all of western Europe last year.
The supreme irony: For decades, Russians waited in lines for essentials. Now they are waiting again -- this time for cars.
Capitalism is the culprit, and inomarka (Russian for foreign brand) is the hot commodity.
Foreign automakers are rushing to set up manufacturing. GM, Nissan and Volkswagen have announced production plans in the past month, as Russia's new-car market is expected to hit 2 million units by 2008, an increase of 22 percent over last year. Foreign cars could capture 70 percent of the market by 2010 by some estimates.
Consumers who are sick of their unreliable domestic-built Ladas now have many choices.
At the dealer level, the story is even more interesting.
The market has been growing at such a pace Russians don't have enough service bays to satisfy demand, says Matt Donnelly, CEO of Rolf, the country's largest foreign-car dealership group. Rolf sells roughly one in five foreign cars in Russia.
Last year Rolf sold 108,000 new cars and serviced 200,000 vehicles. In 2001, Rolf sold 6,936 cars.
Big changes
Soloviov, a Detroit-educated man who has worked for GM as a dealer development manager, has seen frantic market growth since moving back to Moscow to run the Klarus dealership.
In 2003, the dealership's first full year of sales, Klarus sold about 30 vehicles a week. This year it expects to sell at least twice that.
All that growth means that Hummers are not the only vehicles in short supply. Soloviov averages 30 Chevrolet Aveo orders per month; he receives about five. The wait for an Opel Astra can be four months.
"And I have no idea when I will get more," he says.
Soloviov's issues are why GM recently decided to increase kit assembly of Hummers by contract manufacturer Avtotor in Russia's Baltic enclave Kaliningrad. GM also is planning a joint venture in Poland, where it wants to build more Aveos for Russia.
When Soloviov's six-member Chevrolet sales team accumulates 50 unfilled orders, they stop selling.
"We cannot collect an unlimited number of orders," Soloviov says, "or things will get really ugly with the customers."
Bags of money
And what is the typical Russian customer like?
Soloviov says they are hungry for Western cars but still accustomed to Soviet-era methods.
For example, Hummer customers who expect to pay cash for an H2 sometimes arrive at the dealership carrying plastic bags stuffed with U.S. money.
"Not long ago it used to be the only way to do things," Soloviov says.
So much hard currency flows through the door that Klarus added a branch of Extrobank inside the dealership. Soloviov says the business is profitable -- the average gross margin is 8 percent. And Klarus needs no incentive programs.
"We beg GM not to launch incentive programs because we know we can sell the cars," he says.
Financing and insurance are still new concepts to Russian buyers, but they are gaining acceptance.
In 2004, Rolf set up its own financing unit, Rolf Pronto, and its dealerships averaged 22 percent of its sales on credit. This year Rolf expects to increase that to 40 percent.
Leasing also is starting in Russia. Soloviov says leases will be 1 to 3 percent of volume this year, from none a year ago.
"Under the old system, customers would save four or five years to buy a car," Soloviov says. "Now they can change cars every three years."
Inomarka is in demand. Foreign cars are coming. Hummers are hot.
Says Soloviov with a smile: "Like a lot of things, life is changing."
http://www.autoweek.com/apps/pbcs.dll/article?AID=/20060721/FREE/60717019/1041/TOC01ARCHIVE
With Euro's that wouldnt happen.
