Russian authorities have tightened the regime under which foreign carmakers can assemble vehicles in the country.
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Under current rules, foreign-owned carmakers are allowed to bring components into Russia at lower customs duties. In return the government asks that the vehicle manufacturers locate welding and colouring plants for the car body in Russia within four and a half years and reduce the list of imported components by one third over that time.
However, a report by the business newspaper Kommersant today said that the Economic Development Ministry, Finance Ministry, and Industry and Trade Ministry were now ordering that the number of car models produced under a semi knocked-down regime at the start of the project should be equal to the number of cars to be produced at later stages, which include welding and colouring the car body.
The upshot is that foreign producers will not be able to benefit from lower duties for importing components for models that are assembled under a semi knocked-down regime unless they are willing to commit to switching to full-cycle production of these models in future.
The newspaper said that manufacturers will also have to report their investments in Russian plants every six months to the authorities. It was previously done once a year.
Between 1.3m and 1.6m cars are likely to be sold in Russia this year, down from 1.4m in 2009, despite the prospect of scrappage incentives which are due to start in early March, according to a recent survey by PricewaterhouseCoopers.
Russia’s car market plunged 56% last year after the country was hit severely by the economic downturn. PwC noted that, in monetary terms, the market slumped 61% to US$26.8 bn in 2009.
