According to the Russian Association of Car Dealers, over 80,200 new foreign cars were sold in Russia in 2001. At the same time, domestic production totaled 1 million and some 600,000 used foreign cars were brought in the country.

Although the number of new foreign cars imported is incomparable with the number of used foreign cars, in financial terms, the market for new foreign cars showed a 65 percent growth in 2001 (not counting VAT) and equaled approximately $1.5 billion.

This was welcome news for Western carmakers, who increased their sales plans for Russia for 2002 by approximately 50 percent over 2001. According to different estimates, by 2005 sales of new foreign cars in Russia will reach 200,000 to 250,000 annually, including the output of a Ford factory to be launched in the Russian city of Vsevolozhsk and the outputs of the Avtotor and Doninvest assembly lines.

Along with market growth for new foreign cars, Russia has undergone a liquidation of "gray" import schemes. This latter process, a result of government policy designed to pull new foreign car imports out of the shadows, has stimulated the legal market's growth. Two factors played a decisive role: The reduction of the ad valorem component of import duty down to 25 percent in 2001; and the Customs Committee's move to draw up a "white list"of car dealers.

Under decree no. 450 of the State Customs Committee, the official dealers were entitled to declare cars directly according to factory invoices, rather than according to the Schwacke catalogues as required for individuals. This helped reduce customs expenses by at least 10 percent.

That decree was promptly nullified thanks to the efforts of the Ministry of Justice, but the Customs Committee made a second attempt with decree no. 847, which simplified customs clearance for passenger cars, tractors, buses, trucks, car bodies, cabins, chassis with engines, motorbikes and bikes.

State Customs Committee information shows there are 127 listed as official car dealers, which account for the majority of new foreign car imports. Of course, there are no statistics available on the ratio of "white" to "gray" imports, but insiders say that "gray" imports now amount to no more than 10-15 percent.

The changes have also affected the car dealer's style of doing business. The times when a car dealer could afford to be exclusive, selling only a certain company's cars, are about to end.

Today, most large car dealers sell a number of brands. Incidentally, a source close to the Russian Association of Car Dealers told us the Schwacke scheme is still in use for cars that can be imported profitably. But the scheme is also becoming a thing of the past because of its poor efficiency.

The State Customs Committee's second decree, no. 847, to simplify customs clearance for vehicles, at first seemed to share the fate of its predecessor, decree no. 450. The Ministry for Antimonopoly Policies found in February it violated a Russian law, "The Competition and Restriction of Monopoly," for giving unfair privileges to certain market participants and creating unequal conditions for other vehicle importers.

But the State Customs Committee filed a counter-claim, and while litigation is under way, the original decree stays in effect.

The ministry's press service stressed their investigation was not prompted by a complaint from a market participant, but started because the law was violated. The ministry also investigated another State Customs Committee decree, no. 303, which granted a simplified customs clearance procedure for big consignments.

In a public speech, Antimonopoly Ministry head Ilya Yuzhanov noted that his ministry wins 97 percent of legal cases where it is involved. But even if it wins this time, nobody can stop the State Customs Committee from issuing another executive act with similar effect.

The author is a Moscow-based freelancer.