Once earmarked as the only market capable of taking the lead from Germany as the biggest auto market in Europe, Russia has fallen to the point that it needs a crisis-style incentive plan to support its ailing industry.
As the Moscow government tries to do its part in securing a future for the country’s struggling car business, Industry and Trade Minister Denis Manturov announced an extension of the scrappage program for new vehicle purchases that was introduced this autumn. “The decision was made to allocate 10 billion rubles next year to support demand, ” said Manturov. He also told journalists that this year’s program was supplemented with an extra 2.9 billion rubles.
Russia will set aside another 10 billion rubles (150 million euros) for the extension of the scheme into 2015. While in 2013 the stagnating economy and rising local currency were the only threats to the auto sales – triggering a mild and manageable decrease – in 2014 the situation has become dramatic. This year the economical problems were doubled by the Western sanctions over the political and military implication of Russia in Ukraine’s internal conflict, while low oil prices also impacted a once healthy extraction industry. The lower oil price also further weakened the ruble, allowing inflation to grow and denting consumer interest for big item purchases.
Via Automotive News Europe