Russian government is renewing its strategy in the automotive sector

Russian government is renewing its strategy in the automotive sector

Vedomosti – Russian government is renewing its strategy in the automotive sector. Russian prime minister Dmitri Medvedev has instructed the ministries of industry and commerce, economic development and finance to redevelop the country’s strategy in the sector, in cooperation with the actors within the automotive market. The prime minister demanded the new strategy to be prepared within a year. The automotive development strategy, which has been updated once in 2013, since coming into force in 2010, will be valid until the year 2020. The new strategy is expected to remain in force until 2030.

A source from within the sector has made the following comment on the developments to the Vedomosti newspaper: “As car manufacturers, the revision of the development strategy was one of our main expectations from the Russian government, alongside market support. We are glad that they have heard our voice”.

The source draws attention to the fact that the strategy for the automotive sector had been developed in 2010, when the market was growing, however the sales have been on the decline since 2013. A representative from the ministry of economic development shares the opinion that the strategy is out of date already. The official states that the current strategy allows for neither long term government support nor resource allocation to finance such support for the automotive sector.

The prospect of uncertainty from the year 2020 onwards, following the discontinuation of the subsidies implemented within the frame of the industrial assembly regime, is the key problem. The source from within the sector has identified this situation as the main obstacle before long term planning. Representatives from Autostat and PwC, who spoke to Vedomosti, are of the same opinion. A Ford Sollers representative has also stated that they would like to know the government’s view about the future of the automotive sector.

Major manufacturers operating in Russia had signed the industrial assembly regime agreement, which enabled low-tariff or completely customs-free component imports, on condition that a certain production capacity (350,000) and localisation rate (60%) are achieved. The aforementioned regime will remain in force until 2020. According to the analysts, the manufacturers are looking for assurances on the continuation of government support to the sector beyond 2020, in order to keep up the investments.