The Politics of Purchasing a Car

The number of automobiles has close to doubled in the last three years one could conclude simply by strolling the streets of central Yerevan during the day, especially in the morning and afternoon rush hours. Republic Square is now jammed with cars during most of the day and sometimes serves as a giant parking lot. Both sides of Abovyan and Nalbandyan Streets leading into or going away from Republic Square are lined with parked cars, many double-parked, whereas two years ago such a thing was unheard of.

As the country was once limited to strictly Russian vehicles, such as the ever popular VAZ-Lada Zhiguli and Samara models as well as models issued by the GAZ-Volga manufacturing plant, now there is a flood of European cars, largely German. Cars from the GM European division Opel, Mercedes-Benz, and BMW are now commonplace, whereas in 2000 or even 2002 for that matter they were a rare commodity to come upon.

One will notice a sample of nearly any kind of American, European, Japanese, and Korean import once or currently offered in the auto marketplace. It is strange now to see current-model Ford Crown Victoria autos being driven as taxis, as usually taxi services chiefly rely on Russian cars to transport their customers.

One Russian vehicle that is very popular still is the VAZ-Lada model 2121, more commonly known as the Niva (which is the Russian word for ‘field). The Niva is essentially the Soviet’s answer to the Jeep (which is also popular here incidentally). It is a two-door boxy 4 x 4 vehicle with rounded corners. Older models house a 1.6 liter inline 4 cylinder engine, although newer models have a 1.7 liter engine and some even have a fuel injection system. The 5-speed manual SUV was first introduced to the Soviet market in the early 1970s and was manufactured with very subtle modifications until 2004. It was exported all throughout Europe during its tenure and can even be found in Australia as well as Canada. Now a 4-door version of the Niva is available but produced by Chevrolet in Europe.

The Niva first captivated me when I visited Armenia for the first time in 2000. When I moved here in 2002, I concluded that if I ever choose to purchase a vehicle, it would be the Niva.

Of course shortly after my arrival in 2004 I went to the auto marketplace here, where private owners as well as dealers display what they have to offer. I found that the going price for vehicles is extremely high, close to doubling in some cases only in the last year or so.

A new or slightly driven Niva sells for $7500 on average, whereas a 10-year-old nearly identical model costs about $3500. Twelve to fifteen year-old four-door Opels, regardless of the color, condition, transmission type or amount of kilometers driven, sell for at minimum $4000 up to $5000 or more, whereas they are probably worth at the most $1200 in Europe (I could not determine their actual worth, even on online used car pricing guides). Dealers travel to German to purchase the cars, transport them to Armenia at a supposed cost of $1000 each, which is doubtful, and pay out about $500-700 in customs, but still make close to $1,000 in profit, depending on the vehicle and the actual cost they paid.

Soviet cars for that matter are equally high in cost—again 15 year-old models of the rugged four-door hatchback or sedan Lada Samara sell for at minimum $2500, many of them with rebuilt engines, as regular maintenance is not necessarily heeded by drivers. For instance, it is not uncommon to find that drivers have changed the motor oil every 10,000 to 15,000 kilometers or more, thereby putting an excessive amount of stress on the engine. Drivers typically drive their cars until they break down, not having to be bothered with preventive maintenance. Thus you have an old car worth about $500 considering its quality and condition selling for nearly $3000—owners slap on a coat of fresh paint to make them look attractive, but I have found many with worn tires and beaten-up undersides. Customers simply look at the interior, exterior, and sometimes the engine, as few people understand what driving or maintaining a car is all about.

Which is why it is very dangerous to drive a car, especially in central Yerevan. The flood of cars on the marketplace has caused a flood of inexperienced, naïve drivers to hit the road. It is not necessary to actually learn how to drive a car, so long as you are willing to spend a bit extra in bribe money to land a driver’s license, legal of course. Thus you see drivers all over passing each other on the right or cutting off drivers while they prepare to make a left turn. Many drivers do not heed—or understand—traffic lights and simply speed right through red lights. Just a week ago it was reported that a Hummer H2—11 of which roam the streets of Yerevan—slammed into three cars in a busy intersection, killing two people.

After observing the chaos I was hesitant to make the plunge, but I am an avid driver having driven for over 15 years now. Refraining from driving is not an option, particularly when I plan to go on excursions throughout Armenia’s landscape in the coming months.

So I started to take a look around the Yerevan auto market, and was simply overcome by sticker shock. Given that there is a huge supply of cars on the market in Armenia, and that there are not enough drivers to occupy them since not everyone can afford to purchase or even maintain a car, one would assume that the price of cars would be relatively close to their actual worth.

I long ago realized that logic does not apply to most common sense situations here, particularly to the theory of supply and demand. When there is ample supply and modest demand, prices are inflated. The cost of vehicles actually increased 10% at the turn of the New Year, although there are fewer buyers during the winter months.

More on my experience in car shopping soon…