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Russia: Economic Crisis Threatens Used Japanese Car Market

Vladivostok, 12 April 1999 (RFE/RL) -- A few months ago in Russia's Far Eastern city of Vladivostok, the sprawling hillside market known as "Green Corner" was covered with 4,000 used Japanese automobiles.

Toyotas and Hondas were parked on every inch of bare ground and clogged the alleys around nearby apartment buildings.

Mafia strongmen muscled fees out of car sellers eager to park in the biggest car market east of the Urals. People came from as far as 6,000 kilometers away to buy 20 cars at a time to ship back to Western Siberia.

Now, all of that has changed.

Russia's economic crisis has all but emptied Green Corner. And with its collapse, an enormous market for Japan's used cars, vans, trucks and motorcycles has dried up in this city of 700,000 on the Sea of Japan.

Russia is one of the world's largest buyers of used Japanese vehicles, a situation that has suited both Russians and Japanese for cultural, economic and geographical reasons. Japanese citizens tend to replace old cars within a few years, and so there is little market for used cars within their country.

Meanwhile, Russians in the Far East -- nearly 10,000 kilometers from Moscow -- have been happy to buy nearly new automobiles from Japan rather than the smoking, clattering Ladas and Moskviches made in their nation's industrial heartland.

Russian ships regularly visit Japan, only 640 kilometers from Vladivostok, and sailors carry special passports that allow them to import cars duty-free for personal use. More than 90 percent of the cars and vans on the roads of Vladivostok are Japanese made.

Russia isn't the only market for used Japanese cars. Brazil is another nation where people eagerly snap up relatively cheap used Mitsubishis and Isuzus.

Russia's Far Eastern Customs Office reported that in 1997, more than 125,000 used Japanese cars entered the four major ports of Russia's Primorye region, which lies between China, North Korea and the Sea of Japan. In 1998, the figure dropped to around 99,000.

However, the true collapse started after the August 17 financial collapse and the devaluation of the ruble.

In the last three months of 1997, almost 50,000 Japanese vehicles flooded the ports of Vladivostok, Nakhodka, Vostochny and Khasan. In the same period of 1998, a little more than 2,000 cars were imported. During that time, the port of Vladivostok unloaded only 3 percent of the cars that had been imported during the last quarter of 1997.

Stanislav Petrov -- a 27-year-old car dealer who is still hanging on in Green Corner -- says that "the boat used to come in with 640 cars on it. Now you see two cars on top."

The biggest hindrance to sales now is that transactions are in U.S. dollars, and that the ruble keeps dropping. One Green Corner merchant told our correspondent that "the ruble rate is the biggest problem. Whenever it stabilizes, people start coming back. And then the ruble falls and it bottoms out again."

However, even the falling ruble can't keep everyone away.

On a recent afternoon, Sergei Savin -- who traveled from Perm, more than 8,000 kilometers away -- was checking out Toyota minibuses and Honda sedans. Savin, a 38-year-old businessman, planned to buy three new vehicles and transport them to Perm. He might ship the cars back by train. Or he and his employees might drive them back over frozen rivers and pot-holed highways where police set up roadblocks and extract up to $100 from each new owner of a Japanese automobile.

Still, Savin says it is worth the effort to buy a Japanese car in Vladivostok, rather than a Russian model in the much closer markets of western Russia. According to Savin, the quality is much higher.

(Working is a Vladivostok-based contributor to RFE/RL. Nonna Chernyakova contributed to this story.)