Government will allocate industrial subsidies for Russian car manufacturers

Government will allocate industrial subsidies for Russian car manufacturers


Autostat.- The Ministry of Industry and Commerce has presented the concept of differentiation of industrial subsidies, which will de facto compensate the utilisation fees for localised manufacturers and ensure the profitability of production.

Thereby, 50% of compensations will be paid for the presence of a SPIC and the remaining part in accordance with the actual level of localisation in 2020, calculated according to a points system. 75% of the compensations will be paid in accordance with actual localisation as of 2021, rising to 100% in 2022. As highlighted in the concept of the industrial subsidies, the calculation process will include each manufactured automobile. As told by a source from the industry, the scheme probably involves the manual input of points for each car by the manufacturer into an electronic database, for a possible selective audit by the ministry.

The quantity of points to be collected for 100% compensation has been re-calculated within the framework of the concept and the original figure of 4000 points has been amended. The target indicator in the passenger cars segment now starts from 1500 points, which is needed to be collected for a full compensation in 2020-2021. The threshold will increase to 2000 points in 2022, to almost 2600 points in 2023 and to 3700 in 2025-2026. Meanwhile, as stated by the concept, Lada Vesta has already gained 3300 points with automatic transmission and Hyundai Solaris 1400 points. It will be necessary to collect 5400 points in the passenger car segment in 2028. Welding and painting, which are the minimum requirements of SPIC in the aforementioned segment, bring the car manufacturers only 900 points for the industrial subsidies.

As a result, localisation may not deepen in Russian production in the coming years in fact and the foreign manufacturers will begin to lose a part of their compensations from 2020 onwards. In reality, the damage will not be so great in the first years, since the presence of SPIC will guarantee the money. Nevertheless, the new circumstances will lead to an increase in car prices and a revision of business plans in the long term.

Experts are of the opinion that localisation should be stimulated through different methods, rather than the seizure of means by utilisation fees, which were originally a barrier to imports. The rules for the industrial subsidies are being changed within the progress of the game and such steps may result in the reduction of model ranges and less localisation in the near future.