Russia is allocating RUB10 billion (EUR207 million) to finance incentives for new vehicle purchases this year, the country’s industry minister disclosed. The incentives represent a long-awaited relief for both carmakers and customers in a auto market hit by the crisis.
The scheme is set commence in September and is slated to end by yearend. The scrappage program is expected to subsidize the sale of over 170,000 passenger and light commercial vehicles, buses and trucks, according to Industry Minister Denis Manturov.
Under the scheme, buyers could get a discount of at least RUB40,000 (EUR825) when scrapping their old vehicles, with the discount for commercial vehicles starting at RUB350,000. Russia also implemented a state-supported scrappage scheme in 2010, offering consumers cash incentives for trading in vehicles over 10 years old.
Car sales in Russia have dropped so far this year, no thanks to a slumping economic growth that has prompted consumers to cancel or delay large purchases. Consumer sentiment has come under more pressure as the West imposed sanctions against Russia over the current crisis in Ukraine.
This has led car sales in Russia to drop 23 percent to 180,767 units in July. Car sales for the first seven months of 2014 dropped 10 percent to 1.4 million, according to the Association of European Businesses (AEB). The AEB has trimmed its full year 2014 forecast for car sales in Russia, saying it a 12-percent decline this year to 2.45 million vehicles. [source: automotive news europe - sub. required]