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March 8, 2010

RUSSIA: Government introduces ‘clunkers’ programme

The Russian government on Monday introduced a 'cash for clunkers' programme encouraging drivers to trade in old cars for new ones in order to prop up a domestic market badly hit by the global economic crisis.

The Russian government on Monday introduced a ‘cash for clunkers’ programme encouraging drivers to trade in old cars for new ones in order to prop up a domestic market badly hit by the global economic crisis.

Under the experimental programme to run until 1 November, the government will offer discounts of RUB50,000 (US$1,680) to those who want to trade in a car over 10 years old in exchange for a new car built in Russia.

Prime minister Vladimir Putin said last week the government had allocated RUB11.5bn for the programme, which is expected to help Russians pay for 200,000 new cars, AFP noted.

The government programme is expected to help the country’s flagship carmaker Avtovaz to prop up its flagging sales, but foreign carmakers assembling vehicles in Russia, including Ford, Renault and Volkswagen, could also benefit.

Russia car sales plunged 56% last year to 1.4m vehicles, according to a PricewaterhouseCoopers report released in January.

AFP said many auto experts doubt the car scrappage scheme will be effective in Russia and even the government admits problems like the paucity of auto salvage yards present an obstacle.

There are currently only 12 auto salvage yards that are ready to recycle cars under the new programme and all of them are located in central Russia, Alexei Rakhmanov, a senior official with the industry and trade ministry, said in January.

“Recycling sites are a major headache,” he said in comments published on the ministry’s website.

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