Russian politicians say The Kremlin is focusing on the country’s automotive industry due to its crucial multiplier effect on employment, despite catastrophically bad figures announced yesterday showing yet another huge sales fall.
Numbers from the AEB say sales of passenger cars and LCVs sank 43% last month and this on top of a 38% slide in February, but Moscow is doggedly sticking to initiatives to boost the flagging sector, which accounts for around 1.5% of Russian GDP.
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The automotive industry in Russia is beset by a series of macro economic factors largely out of its control at the moment, but estimates still put direct jobs in the sector at around 400,000 with some 4m dependent further down the line.
Moscow has unveiled a series of measures to halt the alarming drop in sales, such as the extension of the scrappage scheme and is due to unveil access to low interest loans with many currently put off purchases due to high interest rates of 14%.
“The reason the government devotes so much attention to the automotive industry is because the industry has the largest multiplier effect,” said Duma Expert Council Innovative Development chairwoman, Alfiya Kogogina at the recent Russian Automotive Forum in Moscow.
“One job created has a knock-on effect. Government support for the market is particularly important. RUB2bn (US$36m) will be used for retraining programmes and employment programmes – this will [have] an indirect effect on the automotive industry and [in] our discussions in the State Duma we have agreed there will be further adjustments to the plan.”
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By GlobalDataThe Duma MP added she had recommended 23 – unspecified – measures to the Russian government to help the sector and that she had the sympathetic ear of the Industry Minister.
One initiative which will be implemented this year will be to encourage government-owned companies to purchase domestically produced vehicles and foreign manufacturers with localised production will be regarded as Russian in this regard.
Kogogina added she did not expect any growth in the automotive sector this year, but for 2016: “We think the market will hit the bottom and rebound.
“This expectation is based on prediction [s] by the Economy Minister and the Central Bank.”
The politican, who noted the Russian automotive sector started in 1906, said even at the height of Soviet Union production, only 1.6m cars were produced, compared to the record year of 2010, when 2.2m were manufactured.
Some have estimated the Russia market could potentially be a 4m market.
