Russia to limit state purchases of imported vehicles

Article by Andrew Christian, on March 26, 2014

Russia is planning to limit state acquisition of imported cars in a move targeted towards helping loca carmakers bear a slump in demand. According to Industry Minister Denis Manturov, a draft resolution on restricting the purchase of imported cars by state institutions and regional governments has been submitted to the government, says Interfax news agency.

"It is to be issued and start working in the nearest future," Interfax quoted Manturov as saying. New car sales in Russia dropped 6 percent in 2013 to 2.78 million units after three straight years of double-digit gains. The decline has delayed Russia’s promotion as the largest market in Europe, topping Germany. In the first two months of 2014, sales have dipped 4 percent, according to the Moscow-based Association of European Businesses (AEB).

Local carmaker Lada posted a 19-percent drop in sales in the same period. Russia slumping economy as well as the escalating row over Crimea have led the ruble to depreciate severely and price of imports to rise – leading Russian to delay large purchases.

While western carmakers have spent a lot to establish local production as they expect a surge in demand from the growing middle class in the country, many parts have to be imported from abroad, thus rendering prices susceptible to fluctuations in the ruble’s exchange rate. According to Manturov, the Russian government did not have any immediate plans to support the local car industry with lending subsidies.

Topics: russia

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