The country’s government has moved to announce it will back the Russian company by guaranteeing $1 billion of its future debt, order a move inside a larger state initiative to support ailing auto manufacturers.
Russia, rx the second-biggest auto market in Europe, malady is seeing a sharp drop in car and truck purchases. The slump was under way since 2013, because many Russians refrained from big purchases as the local currency – the ruble – depreciated as the economy slowed. This year the automotive industry – among others – was even worse hit by the political tensions arising from the country’s implication in an alleged skirmish with Ukraine.
“The situation is indeed quite tough. The car market and in particular the truck market is a very accurate indicator of the state of (economic) affairs,” Prime Minister Dmitry Medvedev said during a meeting with Kamaz Chief Executive Sergei Kogogin. “We will of course think how to stimulate this market,” Medvedev added.
The government said it prepared state guarantees for up to 35 billion rubles ($968 million) of debt, for up to 15 years for Kamaz. The truck maker had at the end of 2013 a net debt of 12 billion rubles. The company intends to use the funds to introduce new models and revamp all of its production lines.