Russian government has increased the rates of utilisation fees for vehicles

Russian government has increased the rates of utilisation fees for vehicles

RusAutoNews.Com – The Russian government has approved the indexation of the utilisation fees for passenger cars, commercial vehicles including trailers in Russia, as of 1 April 2018. The relevant document has been signed by the Russian Prime Minister Dmitry Medvedev.

“The utilisation charges will increase at an average rate of 15%. The aim of the decision is to create conditions for the development of environmentally friendly technologies in waste processing” – as stated in the official document.

The government decree (number 300) dated 19 March 2018, has been published on Wednesday, on the utilisation fees for transport vehicles. Details of the indexation (in Russian language): Decree No. 300 /19 March 2018

In January 2018 the Association of European Businesses (AEB) Automotive Manufacturers Committee has declined to make a forecast on the Russian automobile market for 2018, due to the govenment plans to increase the utilisation fees.  AEB expects an enormous impact of the new regulation on the automotive market.

As one may remember, the basic fee of utilisation for a passenger car amounts to 20,000 rubles and 150,000 rubles for trucks and buses. Specific coefficients are used during the calculation of the fees, depending on the capacity and the class of the automobiles. As stated by the government, the increase in the utilisation fees aims to create favourable conditions for the development of the environmentally friendly technologies in waste processing.

The coefficient for the utilisation rate will increase from 1.42 to 1.65 for new cars with engine capacities up to 1 litre and from 5.3 to 6.15 for vehicles older than 3 years of age, from next month onwards. 

The coefficient will almost double for the new models in the 1 to 2 litres car segment, from 2.21 to 4.2. The manufacturers will have to pay the government 84,000 rubles, instead of 44,200, almost twice as much.

The coefficient will go up from 8.26 to 15.69 for second hand vehicles.

As previously, the increasing fees will hit the importer companies the hardest, whose share in the domestic market shrinks year by year.

Car companies making production in Russia, including global OEMs, receive a significant state support. The planned annual state support is over 125 billion rubles for the 2018-2020 period, including programmes for demand stimulation and coverage of the production costs of manufacturers, rewarding compliance with environmental requirements.

The rumours about utilisation fee increase came to surface at the end of last year. At the time, the Ministry of Industry and Commerce had stated that the increasing fees would not trigger a price rise, in reference with the government support provided for the car manufacturers.

As noted by the experts, the Russian car market has recently started to recover and is still in a weak position. In this regard, he characterised the actions of the government as strange.

As one may remember, the utilisation fee, paid only once in the lifetime of an automobile, was introduced in 2012, in order to compensate for the consequences of Russia’s entry to the WTO. In order to make up for the forced reduction on the import duties on cars, the government had come up with the idea of collecting money from importers for the utilisation of vehicles. The fees were only paid by importers in the beginning and the Russian factories gave guarantees for utilisation, however, the fees are being applied on every manufacturer since 2014, due to the pressure from WTO-member countries, through the WTO legal system. The Russian car manufacturers receive industrial subsidies, as a compensation for the fees.

The fee has been fixed as 65% in 2016.