Russia plans RUR271 billion subsidies for auto industry

Article by Anita Panait, on January 22, 2014

Russia is planning to support its auto industry with up to RUR271 billion ($8 billion) of subsidies for the three-period that ends in 2016. The subsidies will be intended for research and development and to support jobs, as well as to offset some costs related to compliance with stringent exhaust emission standards, the Russian government said on its Web site.

Car sales in Russia dropped 6 percent to 2.78 million in 2013, and may suffer another year of weak sales this year as its slumping economy discourages consumers from making big purchases, according to data from the Association of European Businesses. The AEB said car and light commercial vehicle sales are seen to dive by 2 percent in Russia in 2014 to 2.73 million units.

Russia launched a recycling fee for imported cars, enraging the European Union which argued the fee was not compatible with country’s membership of the World Trade Organization (WTO).

The United States and Japan also complained about the recycling fee. Russia responded in 2013 by saying it would apply the same fee to all cars – no matter where they were sourced.

Some analysts even quipped that the latest support program is a way of offsetting the additional cost for local carmakers. "The introduction of subsidies will reinstate such government support to the industry at no additional cost to the budget," analysts at Bank of America said in a research note.

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Topics: russia, sales

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