Mercedes cars becoming currency of choice for Ukraine's newly-rich entrepreneurs
o well-groomed young men inspected dashboard layout, windshield wipers, and spare tire well.
Meanwhile, their buddy Vladimir Leskov was chatting on the mobile.
'We're at Mercedes checking out some wheels,' he said. 'No, the prices aren't that bad.'
A successful local businessman, Les-kov can afford to talk that way about a sedan listing at about a Hr. 124,500 ($60,150), Ukraine-delivered. The overwhelming majority of his countrymen would, at present national wage averages, have to go without food and housing for about a century to buy their own example of Sindelfingen-crafted automotive excellence.
But stalled reforms notwithstanding, these days more and more Ukrainians are finding the wherewithal to do just that – and in far less than a lifetime.
The explanation lies in Ukraine's vibrant shadow economy, by most estimates now accounting for more than half of the country's entire GNP. The men controlling that wealth, sometimes steel magnates and sometimes grain traders, are now some of Stuttgart's best customers.
Praveks Company President and NDP Parliamentary Deputy Leonid Chernovetsky currently owns two 600 series, one 500, and one 320, according to a Holos Ukrainy newspaper report.
But Ukraine's newly-wealthy are not buying Mercedes because Dad wants to haul the kids in state-of-the-art safety. Nor was 30-something Leskov focusing on speed, even though the sedan he was considering would – assuming Ukraine had a suitable road – top 220 kph. (135 mph.) on the flat.
'It's an investment,' he explained. 'One of the very best available today.'
In Ukrainian securities markets fraught with fraud and manipulation, the stock option is not.
Other traditional receptacles of wealth also fare poorly in Ukraine. High-end real estate prices are almost nominal. Banks can fail.
For Ukraine's very wealthy, a top-of-the-line S600 ($135,600) is a tempting alternative.
Slightly less than one of every five of 1997's Ukrainian passenger car sales were 600 class, Mercedes-Benz Ukraine Director Horst Herdtle estimates.
'That's about double the rate [of 600-series purchases] in Europe,' he said.
Mobility is a key to that popularity. In tax-dodging Ukraine, a key investment consideration is the degree to which the government might later be able to get at what one sinks one's money into today.
Transfers abroad out of the reach of the tax man can, given the close ties between law enforcement and the banking industry here, be retroactively nullified. By definition impossible to move, real es-tate is even harder to hide.
Vehicles, on the other hand, have wheels. A Ukrainian tycoon with a few good drivers in his MBs has, if suddenly audited, only 200 – 300 km. of road and a border crossing between his wealth and an unexpected bite by the tax man.
To intercept him, the government must rely on customs officers and border control personnel who earn $50 – $100 a month, often paid months late.
'A guy who has the money,' noted Ukraine Anti-Narcotics Enforcement Chief Vasyl Levoshko. 'Can cross the border in our country pretty much wherever he wants, with whatever he wants.'
A marketing industry professional told the Post 176 privately-owned S-series are warehoused in Kyiv and used, not as transportation, but as trading chips between Ukraine's rich. The Post could not confirm the report. But highly-mobile investment is not the only factor.
Like anywhere else on the planet, a Mercedes retains its value in Ukraine. The experts know it.
'It's true parts are expensive. But also there is a basic difference between a Mercedes and Audis and Japanese cars and Korean cars,' said Kyiv Automobile Market Sales Director Serhy Britsky. 'After five years on our roads the Korean car will start falling apart. But after five years a Mercedes is the same, only five years older. Mechanically it is unchanged.'
Britsky estimated that a fifth of all cars traded at the used car market are MBs, almost twice Mercedes European market share. And then there is the snob factor.
'Mercedes are the most prestigious car you can drive here,' Britsky said. 'No other make will give you so much respect.'
The unique combination of value retention, stroke with one's peers, and potential mobility has made for sales. Last year Mercedes sold some 200 passenger vehicles through its Ukraine dealership, while another 200 were privately imported, Herdtle estimated.
The Ukrainian customer already has demonstrated his own peculiarities. Unlike his Russian cousin, he is less likely to want the huge S-series with dark windows so popular with Moscow government and business.
'The S-series is not the most popular vehicle here,' Herdtle noted. 'That would be our midrange sedans.'
Also in contrast to a Muscovite, the Kyiv Mercedes buyer would rather leave the customs to the auto dealership.
'Customs is certainly a problem,' he said. 'We [at Mercedes] have to keep much higher spare parts stock levels here to account for the 7 to 10 days it takes to get our spare parts past customs.'
But once the vehicle is in-country, Mercedes sedans are finding buyers even in one of Europe's weakest eco-nomies. Last Wednesday sales appeared set to pip upwards yet again.
'I'll probably buy,' Leskov said. 'I'm not going to find a better car for our Ukrainian conditions.'
