THE LADA: CAR OF CHOICE IN BALTICS.

For those Westerners who have an image of the Baltic states as smaller versions of Scandinavian countries, recent data on new car sales provide a reality check. Through October of this year, of the 6,044 new cars registered in Latvia, Russia’s AvtoVAZ had the largest market share, with 643 new AvtoVAZ Ladas sold (Baltic News Service Business Daily, November 4). By contrast, the Lada was only the fifth most popular car in Latvia last year. Lada sales are also surging in Lithuania: Two hundred and fifteen Ladas (also known as Zhigulis) were sold there during the first half of 1999, a four-fold increase over the first half of 1998 (ELTA, July 13). Ladas have long been popular in Lithuania, however: As of February, (nearly 160,000) 159,410 of the 950,000 cars registered there were Ladas.

Estonia is often perceived as the most successful of the Baltic trio, and by the “Lada” measure it still is. In terms of auto registrations, AvtoVAZ’s Lada still holds the number one position, with 109,102 of Estonia’s 465,520 registered cars. But nearly half of these Ladas are over fifteen years old, and are giving way to European and Japanese imports. The best-selling cars in Estonia in the first ten months of 1999 were Toyota, Volkswagen, Honda and Mazda. For the past three years, Toyota and Honda have battled for the top of the market.

Although Estonia, Latvia and Lithuania are now preparing for EU membership, purchasing power in these economies, while increasing rapidly, is still well below West European averages. Estonia’s GDP per capita last year was just US$3,591, Latvia’s US$2,622 and Lithuania’s US$2,889. By 2003, the earliest possible accession date, Estonia’s GDP per capita is forecast at only US$5,623. In contrast, GDP per capita last year in Portugal, the poorest EU country, was US$10,707. Many Baltic families therefore find that Russian cars fit their pocketbook, if not necessarily their desire for rapid convergence to Western living standards. The slowdown in the Baltic economies that set in after the collapse of the Russian ruble (and Russian markets) in August 1998, and the large price reductions in Russian auto imports which have followed, have driven this point home.

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