Russia Hankers for Luxury Cars

Banker Igor Skibar remembers his first car, a Soviet-era Lada, as a “nightmare.” Twenty years later he’s moved on to a Volvo XC90 sport-utility vehicle, and this summer he bought a Land Rover Discovery 4 for about 2 million rubles ($62,400). “I need a respectable car to visit clients and travel outside the city,” says Skibar, 41, who lives in the St. Petersburg area. “I earn enough money to do it with ultimate comfort on bad Russian roads.”

A lot has changed since the days when the Soviet Union’s leadership vilified the conspicuous consumption of the West. Fueled by an economy based on Russia’s abundant natural resources, the number of households able to afford luxury goods is set to rise to 13 million by 2025 from 7 million in 2010, according to consultant Capgemini. Such forecasts are prompting high-end carmakers to expand their presence in the country. Volkswagen’s Porsche unit plans to double its number of dealers there to 36 over the next six years. Audi is adding showrooms and aiming for 30,000 car deliveries this year, double its 2009 sales. BMW will add about 20 outlets by 2018, a third more than today.