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Right-hand Drive Fuels Revolution in Russia’s Far East

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A view of the Zelyony Ugol (“Green Corner”), Vladivostok’s famous, but dwindling car marketVladivostok
16:51 03/10/2012
VLADIVOSTOK/MOSCOW, October 3 (Alexey Eremenko, RIA Novosti)
Tags: APEC, United Russia, Igor Shuvalov, Primorye Territory, Vladivostok

One thing that puzzles visitors to Russia’s Far East City of Vladivostok is the traffic.

“Look, this car drives on the left,” two Chinese delegates to the recent APEC summit observed from a shuttle bus. They were left visibly perplexed when they saw that the next three vehicles all turned out to be right-hand drives.

Russia drives on the left, but in Siberia and Russia’s Far East, Japanese imports dominate the car market, and right-hand drives are common.

This does not just surprise visitors – it has created a significant political fault-line. The government has been steadily piling on the pressure, using tariffs and regulations to drive up the prices on imports, in an attempt to end the region’s automotive independence.

Economic alienation slowly grew into political estrangement: the crackdown on an industry that created thousands of jobs triggered mass protests three years ahead of those seen more recently in Moscow.

Four years ago, tensions reached boiling point, and riot police had to be flown into Vladivostok to restore public order. Today, 60 percent of vehicles in the Primorye Region remain right-hand drives.

Meanwhile, the protest leaders are gearing up for the local elections in which the opposition expects to trounce the party of power, United Russia.

An Age of Decadence

Vladivostok’s car market, the Zelyony Ugol (“Green Corner”), cuts an imposing sight for a first-time buyer. The car horde sprawls across several hills, looking to all intents and purposes like a motorized army camping out in a city suburb.

But moping dealers say it used to be twice its current size – 7,000 vehicles on offer as of September 2012 – in the mid-2000s.

“We’re making the same 5-percent profit as ever,” said dealer Sergei, who whiles away his time on the job soaking up the scorching September sun. “It’s the customers who pay more.”

© Photo Dmitry Zabora

A used Japanese car averaged $2,500 to $3,500 at the turn of the century, but now costs about $10,000 more due to various import tariffs, said Sergei, who preferred not to give his full name.

Sergei and his shirtless colleagues waste no time slamming the government and discussing emigration plans. The only politicians to elicit a positive reaction are members of TIGR (“Tiger”), a local group that grew out of local protests against rising car import tariffs.

“They’ve been aiming to put strong people out of business,” TIGR co-founder Maxim Vedenyov said about the federal policies in the region. “Now the stubborn just emigrate – New Zealand, Australia, Singapore or Bangkok.”

The population of the Primorye Territory shrunk 300,000 to 1.9 million between 1989 and 2010.

Protest Pioneers

The first tariffs targeting imported right-hand drives were introduced in the mid-1990s, and new regulations increasing the price of imports continue to appear. The most recent one, the scrappage duty – which ranges from 3,000 rubles to 700,000 rubles ($100 to $23,000) depending on the car price – came into force in September.

But push really came to shove in 2008, when import tariffs for used cars were hiked 100 percent for sedans and 200 percent for trucks.

Protests swept Vladivostok, with people on the streets swiftly moving from economic demands to anti-governmental slogans. Thousands of motorists blocked highways and even tried (unsuccessfully) to storm a local airport.

“A police officer told me ammo vanished from all hunting stores,” a regional government official recalled. “I visited some 50 protesters I knew personally, and said, are you crazy? We don't want any violence.”

But in the end, the violence was one-sided. When local cops refused to intervene, Zubr riot police divisions were dispatched from Moscow to crack down on the motorists. The protests were dispersed, hundreds of angry car buyers were detained, albeit briefly, and protectionist tariffs were enforced.

“They've really hit business hard, you could see closure signs all over town,” said Vedenyov.

But because of the protests, the government never implemented a more radical plan to ban right-hand drive outright, said regional Communist lawmaker Artyom Samsonov, who also participated in the protests.

© RIA Novosti. Alexey Eremenko

No SUV Like Japanese SUV

The share of car imports in Primorye Territory’s GRP has fallen from 15 percent in 2008 to 1.7 percent in the first seven months of 2012, according to the region’s Economy Department. However, it grew 13 percent year-on-year between January and July.

But 60 percent of vehicles (about 970,000) in the Far East are still right-hand drives, according to a July survey by Autostat market research company. Another 950,000 right-hand drive vehicles are in use in Siberia, compared to 560,000 west of the Urals.

There is actually a monument to right-hand drive in Vladivostok – a somewhat graceless bas-relief on Sportivnaya Street in the city’s east depicting a sailor clutching a steering wheel in his right hand – raised defiantly above him. Tellingly, it was only unveiled this August.

Russian carmaker Sollers opened a state-subsidized car factory in the region in 2009, and is building two more plants with Japanese partners to produce Mazda and Toyota cars respectively. It is also considering joint ventures with Japanese and Korean companies to produce car components, including seats, dashboards and suspensions.

But these plants are only set to create about 3,000 jobs. Meanwhile, up to 200,000 people were employed in the car import industry in 2008, a time Vedenyov dubs Vladivostok’s “golden age,” and the minimal estimate for job losses over the crackdown is 20,000, Samsonov believes.

The real figure is probably significantly higher, since many people worked in the industry only part-time, purchasing the occasional car at an auction in Japan to have it shipped to Primorye by ferry and resold, Samsonov said.

One of those to enter the industry that way was Dmitry Zabora, who resold his first car purchased in Japan with money his parents lent him back in 2003. Now his company, Carwin.ru, sells 70 to 100 vehicles a month, most of them Japanese imports.

Car imports are not going anywhere, despite rising tariffs, as long as certain types of vehicles, such as reliable hatchbacks, seven-seat minivans or quality all-wheel-drive vehicles, are not directly available in Russia, Zabora said.

The market can adapt to most protectionist tariffs, but the uncertainty created by constantly emerging new rules is a serious problem for car dealers, he said.

Most new regulations, such as the scrappage duty, are announced months ahead of implementation, but the details are then repeatedly revised in bureaucratic tugs-of-war, leaving the industry hanging.

Wild rumors and exchange rates also influence the industry, Zabora said.

But all said, the vast majority of cars in Primorye remain Japanese right-hand drives, “the most high-quality cars in the world,” said Zabora, himself a proud owner of a state-of-the-art Japanese SUV.

The Tiger Thrives

Since 2008, the protest movement in Vladivostok has split into two factions, led by Samsonov and Vedenyov respectively (each offering their own interpretation of the TIGR acronym).

But despite the bad blood, both seem to be going strong – harassing the authorities through their attempts at public control.

Samsonov, who cycled to the interview, says he had just been at a picket against illegal city development. Given the considerable volume of APEC-related construction work in Vladivostok, he has his work cut out for him.

“Ask any prosecutor, judge or cop about me, and you'll get a sour look,” Vedenyov says dispassionately. “They've all had it up to here with us.”

His TIGR has involved in a variety of disputes, from closure of enterprises in single-factory towns (“we had to bring in food and press as humanitarian help,” he says) to overcharges for utilities payments.

They even managed to have a local judge in Shotovsky district stripped of privileges and made subject of a criminal investigation – something that barely ever happens in Russia, where bureaucratic solidarity among officials usually overrides any grassroots pressure.

Grab the Power

Primorye voted 33 percent for the ruling United Russia in the parliamentary elections in December, compared to the party’s national average of 49 percent. Even the involvement of First Deputy Prime Minister Igor Shuvalov – a high-profile media figure with an all-American smile who topped United Russia’s list in the region – failed to boost the party of power’s performance. It even lost to the Communists in Vladivostok.

“Now we want 50 percent of seats on the city legislature” in the October 14 vote, said Communist lawmaker Samsonov. “And why not? We've always been a rebellious region.”

Vedenyov and three other members of his branch of TIGR are also running for the city parliament. They were nominated by the second-tier liberal party The Right Cause, but say they only did that because running as independents would have made it easier for authorities to kick them out of the race.

They have a good shot at winning: car dealers at Zelyony Ugol say TIGR is the one group they would vote for, and seem genuinely surprised and delighted to learn they would have the opportunity.

Both Samsonov and Vedenyov say they expect ballot rigging by authorities, who are reportedly in hot water over United Russia's dismal showing at the parliamentary polls.

Only 27 electoral violations were reported in Vladivostok by independent watchdog Golos at the December vote, while regional capitals in European Russia averaged upward of 100 reports, though next to none were confirmed by courts.

In any case, the authorities in Primorye are on the defensive, three-plus years after the riot police show of force that the locals still cannot get over.

“The authorities didn't give a damn about what the citizens think, this is how TIGR came in to being,” Samsonov said. “You just don't beat people up for expressing an opinion.”

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RIA NovostiA view of the Zelyony Ugol (“Green Corner”), Vladivostok’s famous, but dwindling car marketRight-hand Drive Fuels Revolution in Russia’s Far East

16:51 03/10/2012 One thing that puzzles visitors to Russia’s Far East City of Vladivostok is the traffic.>>

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