The government is discussing support measures for the automotive industry

The government is discussing support measures for the automotive industry


 

Autostat.- The government has started to formulate a proposal on the support of the automotive industry, which will be discussed at a meeting with Vladimir Putin on 22 April.

As reported by Kommersant newspaper, quoting their own source, the utilisation fee payments will be delayed until the end of the year. The companies which signed Special Investment Contracts will be eligible for this opportunity, within the scope of the aforementioned draft resolution prepared by the Ministry of Industry and Commerce. Direct support is not considered for individual concerns. In the meantime, the Ministry of Finance has stated its opposition to the deferment of utilisation fees, according to the newspaper. The utilisation fees have a significant share in the expenses of car manufacturers and with almost zero revenues from operating activities, the postponement will avoid staff reductions. The released funds will be sufficient for normal operations for at least one quarter, as told by the automotive industry participants.

The need to ensure the operation of the distribution chain: component manufacturers and dealers is another issue discussed by the government, besides the utilisation fees. The establishment of dealer centres has been advised by the government previously, however, only a few regions have followed the recommendation. Meanwhile, the market players share the view that the establishment of dealer centres will not solve the problem of insufficient demand, as long as the clients remain reluctant to purchase automobiles due to uncertain circumstances. Concrete measures on the stimulation of demand have not yet been formulated by the government, according to the sources of the newspaper. The implemented programmes of preferential car loans and leasing are far from making the desired effect, in the conditions of high borrowing of the population and the problems faced by small and medium-sized businesses, as noted by the sources. No department has come with a fresh idea yet. The proposal made by AEB to launch a new fleet renewal programme has been found controversial, arguing that such a move would shift the demand from the primary market to secondhand vehicles. The car factories, now mainly operating at warehouses, have resumed mass production at the beginning of the week. The automotive industry would be back to production in full capacity in a few weeks with the help of demand stimulation programmes. In fact, the state has remained the only financially reliable buyer at the moment, however, the government purchases will not be able to support the car market.