The government has approved the automotive industry support measures

The government has approved the automotive industry support measures

Kommersant – Russian prime minister Dmitri Medvedev has signed a government decree, proposing a 50 billion rubles support for the Russian automotive industry in 2016. The head of the government has made the relevant announcement during the meeting at AVTOVAZ on 22 January.

As expected, the amount of funding has remained unchanged according to traditional anti-crisis measures, as written in Kommersant newspaper. Accordingly, 22.5 billion rubles have been allocated for the automobile utilisation programme, 5 billion rubles for promotional leasing and 3 billion rubles for the purchases of natural gas fuelled vehicles. Thereby, the funding for the induced car loans programme has been reduced by 1.2 billion rubles, to 2.3 billion rubles year-on-year, however, an additional amount of 9.9 billion rubles have been allocated for the fulfilment of the obligations of equivalent programmes, implemented in 2013 and 2015.

Moreover, a new demand stimulating measure for the automotive industry has been proposed during the meeting: 3 billion rubles worth of subsidies for ambulance procurement. The last procurement of ambulances had been made nearly a decade ago, with 17,000 vehicles (the total ambulance number:22,000), as told by the Health Minister Veronika Skvortsova in December 2015. Vladimir Putin has also highlighted the need to renew the ambulance fleet, during his speech at the Federal Assembly. According to sources, the biggest LCV manufacturer of Russia: GAZ Group has lobbied for the technology renewal subsidies, with the potential support of Ford with its Transit model, Mercedes with Sprinter and UAZ. Due to the budget deficit, the necessary amount of 3 billion rubles has been transferred from the funds originally allocated for the support of exports.

Both Dmitri Medvedev and the minister of industry and commerce Denis Manturov have stated that the exports will give the chance to compensate for the collapse of demand in the Russian market, when the devaluation of the ruble is taken into consideration. The presentation of the ministry of industry and commerce at the meeting indicates that the department, which organises the Russian subsidiary of Renault, has plans to start production in Algeria, with a potential amount of 22,000 vehicles this year. The assembly of KAMAZ, GAZ Group, UAZ, AVTOVAZ and Nissan can be organised in Iran, the second biggest market for the Russian automotive industry, with 11,000 vehicles. The Ministry of Industry and Commerce expects an approximate volume of 5000 automobiles in European markets, through direct imports (AVTOVAZ, GAZ Group). The ministry is aiming to increase the share of Russian automobile exports from 7.7% to 25% until 2025.

The second anti-crisis measures to be taken concerning the development of the automotive industry is the import substitution of components. Concrete measures will only be taken within the frame of the new strategy for the development of the industry, which will be formulated until 1 March 2016. Denis Manturov has stated that the new strategy will be based on a conservative scenario, taking production capacity into consideration and the focus will be on the optimisation of inefficient facilities.