Russia has introduced a US$267m automotive scrappage scheme from today (1 September) in a bid to halt the alarming slide in vehicle sales this year as continued political unrest triggers consumer unease.
The country last saw a scrappage or ‘recycling’ scheme in 2010, extended into 2011, but this time the incentive will only consist of a sharp four-month burst from today until New Year’s Eve, estimated to boost the market by around 170,000 vehicles.
Go deeper with GlobalData
News of the scheme, worth slightly more than US$1,000 per car, confirms comments made to just-auto last week by Russia’s Ministry of Trade and Industry that the question was “under discussion,” while the Association of European Businesses had also broadly hinted action was imminent.
“I think it is pretty realistic to assume something will happen rather sooner than later,” AEB Automobile Manufacturers Committee chairman, Joerg Schreiber, told just-auto at last week’s Moscow Motor Show.
“If anything might happen, it may come in the last quarter of this calendar year. I would not be worried [concerning any pull-through effect] – I think it would be a welcome come-back for most brands.”
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.”
The programme 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.
The incentives will cover all categories of vehicles, namely, passenger cars, off-road vehicles, light commercial vehicles, lorries, and buses.
“In this case, we make no difference between individuals and legal entities,” said a statement from Manturov’s Ministry. “The main distinction from the previous programme is we plan not only disposal of vehicles against a subsequent discount but also discount-carrying trade-in deals for vehicles older than six years.
“There is no difference in this case whether you trade in a lorry and buy a passenger car or vice versa.”
Discounts on disposal deals are RUB40,000 plus for passenger cars and up to RUB350,000 for lorries. For trade-in deals, the figures will be RUB40,000 plus and up to RUB300,000, respectively.
Despite the very brief length of the scheme initially, the 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 auto-making 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 programme has been fully coordinated with the Ministry of Finance as have the sources of funding. The Ministry will redistribute the allocations it has received.”
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.
