Russia is to introduce a scrappage scheme aimed at boosting its flagging new vehicle market.
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The government said it will set aside RUR10bn (US$342m) and will pay consumers RUR50,000 ($1,750) to scrap a car at least 10 years old and replace it with a Russian-assembled domestic or foreign brand vehicle.
New vehicle sales fell 50% to around 1.5m last year and the new programme, which is due to start on 8 March, is expected to generate 200,000 new car sales in Russia.
Analysts say that sales could increase by 5%-10% this year although cash strapped dealers will not be able to afford to wait too long to receive government scrappage refunds.
The programme is aimed at encouraging people to buy domestically – assembled vehicles rather than lower priced used cars imported from Japan and South Korea.
Recent government attempts to stop the flood of used imports into eastern Russian regions were greeted by angry protests. Moscow subsequently promised to make it easier for buyers to afford new Russian-made cars.
