RUSSIA: Scrappage could boost market 10%: Moscow analyst
Russia's scrappage scheme news was timed for the Moscow Motor Show opening
Russia's announcement it is to revive its automotive scrappage scheme could boost the beleaguered sector by up to 10% says one Moscow-based analyst.
The country saw auto numbers plummet 23% in July according to the Association of European Businesses (AEB), but the US$267m scrappage or recycling scheme could add 170,000 extra sales during its four-month validity to 31 December this year.
The deal - which extends to all vehicle types - will be worth slightly more than US$1,000 per passenger car - and will be undertaken by dealers based on deliveries and by producers "at their own expense" with the discount premium to buyers to be compensated by the regions at the end of the year.
"I think the scrappage scheme is actually very good news for the industry," Ernst & Young CIS automotive sector leader, William King, told just-auto from Moscow.
"It is targeted to improve volumes by about 170,000 units which will be somewhere around a 8%-10% boost dependent upon whose forecast is more in line.
"It provides incentive to a mix of passenger, light commercial and commercial vehicles so it addresses all sectors.
"I'll be interested to see what the uptake is - [I] suspect it will be positive - the last scrappage scheme was very popular and brought a lot of buyers into the market."
Russian Trade and Industry Minister, Denis Manturov, noted funds would be transferred to the country's regions through "subventions at the end of this year."
Despite the very brief length of the scheme initially, Manturov's Ministry does not rule out further developments, adding: "Where plans for the next year are concerned, they will depend on the market situation and the state of the automaking industry.
"Decisions on market incentives will be approved on a segment-to-segment basis subject to their development rates not earlier than the middle of the next year."
The AEB - representing 600 domestic and overseas companies in Russia - said July sales of new cars and light commercial vehicles dropped 22.9% noting the overall trend is "worrisome" after months of consecutive falls.
This week sees Russia's bi-annual Moscow Motor Show - traditionally viewed as giving a filip to the industry.