Russia planning subsidy for auto industry image

The government announced that Russia plans to support its struggling auto industry with subsidies of up to 271 billion rubles ($8 billion) in the three years to 2016.

Russian car sales fell 6 % to 2.78 million in 2013 and face another weak year as a stuttering economy puts off buyers, according to data from the Association of European Businesses, released last week. The AEB said car and light commercial vehicle sales are expected to decline by 2 % in Russia in 2014 to 2.73 million units.

In 2012, Russia introduced a recycling fee for imported cars, angering the European Union which argued that the fee — to cover the cost of scrapping a car when it becomes too old to drive — was not compatible with Russia’s membership of the World Trade Organization (WTO).

The United States and Japan also complained about the levy. The Russian government responded last year by saying it would apply the same fee to all cars – whether imported or manufactured in Russia – and some analysts said the latest support is a way of offsetting the additional cost for domestic carmakers.

The subsidies will be for R&D, to support jobs and to compensate for some costs related to meeting tighter exhaust emission standards, the government said in a statement on its Web site. Russia last year also tried to prop up car sales with an incentives program for consumers, which ended in December.

Via Automotive News Europe