Russian government officials are confirming they will maintain the level of subsidy this year to the automotive sector, with The Kremlin insisting the segment remains a top industrial priority.
Moscow is to pump RUB50bn (US$703m) into the automotive industry, mainly through an aim to reduce Russia’s car parc age, while lower vehicle credit and rental rates programmes will remain.
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Russian companies will also receive financial support on their investment credits, with the State allocating funds to regional authorities
“The support plan was the very first plan signed by [Prime Minister] Dmitry Medvedev,” Russian Deputy Minister, Ministry of Industry and Trade, Alexander Morozov told just-auto on the sidelines of today’s (15 March) Russian Automotive Forum in Moscow.
“Absolutely, it [car industry] is an important sector of the Russian market. We are supporting according to the rules. Currently we have an [automotive] budget for one year – we [believe the] automotive industry is a priority.”
Speaking next to the Deputy Industry Minister, Autostat analytical agency director, Sergey Tselikov also pointed to some encouraging signs in the wider economy, after a year of massive successive falls in Russian automotive purchases, that have come against a backdrop of a rouble in freefall and a plunging oil price, while Moscow is also enduring the wrath of the international community for its annexation of Crimea.
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By GlobalData“We are virtually at the bottom,” said Tselikov. “Without these [subsidy] programmes, the market would have plummeted much more. Five hundred thousand cars have been sold within the framework of the subsidy programmes.
“What is in store for us this year? We see consumption will go down and the behaviour of the customer will be the same. People will continue to save money because they don’t understand what is going on.”
Morozov noted forecasts for last year had actually predicted a worse outcome than that which transpired, with observers maintaining Russia will see a 1.6m market for 2016.
“The forecast for 2015 was even more pessimistic than we actually got,” said the Deputy Minister. “We managed to avoid this catastrophic scenario. We launched a number of programmes to support OEMs and managed to improve the market.
“We see the government signed budget money to support [the industry] and make manufacturing much more efficient than in 2009.
“The government, having spent RUB43bn, has managed the market [to] better levels. We think it is necessary to try to maintain the passenger and truck market and not let it drop further.
“This year we plan to increase the support of State funding. First, renewing of the car fleet, then leasing programmes and special automotive lending for trucks. Supporting interest rate subsidies to buy electric transportation for cities and a special programme right now to renew the ambulance fleet.
“The final approval is pending and the documents will be submitted to the attention of the government.”
Morozov maintained the first week of March saw 83,000 cars sold due to The Kremlin’s measures, with Moscow aiming to keep annual sales above the 1.6m level.
