Russia increases auto industry support to $424 million image

The country’s officials have pledged more than 25 billion rubles ($424 million) from state coffers in a bid to subsidy the crippled auto industry, also lifting the pledged aid announced last week.

During an auto industry encounter on Monday, Prime Minister Dmitry Medvedev announced the new subsidies will be used to support interest on car loans, lower the cost of leasing and finance more purchases of trucks and commercial vehicles by state institutions. Last week the government initially pledged the allocation of 10 billion rubles to further support a car-buying incentive program that gives discounts to owners who buy a new vehicle and trade in their older car or SUV. Russian Industry and Trade Minister Denis Manturov said that even more support is on the way in the form of additional funds, which include a 5 billion rubles expenditure on the car-buying subsidies needed to lift demand during the year’s second quarter and around 11 billion rubles will be used to fund federal authority acquisitions.

Manturov forecasted the announced measures could level the auto market collapse to a 24 percent drop for the entire year. Accounting firm PricewaterhouseCoopers recently predicted that in 2015 Russia’s new car sales could decline between 25 percent and 35 percent. The auto market, once poised to overtake Germany as Europe’s largest, crumbled under the pressure of the feeble economy, in turn devastated by the low global oil prices, Western sanctions imposed over the Ukraine interference and the collapse of the local currency.

Via Automotive News Europe