Russia’s car industry to get subsidies in 2016 image

The Russian government plans to stop the downfall of the country’s automotive market by giving subsides on buying new cars this year.

Russian Prime Minister Dmitry Medvedev has signed a decree to provide 50 billion rubles (around 650 million dollars) in government subsidies to the country’s troubled car industry. Half of that amount will go on a program offering discounts to people trading in their old vehicles for a new one, Medvedev said during a meeting of auto-industry officials in the car-producing town of Togliatti. The Russian economy has been in its deepest crisis in a decade, Medvedev said a week ago, with prices for oil falling at the lowest level in 12 years, accompanied by inflation and a continuous ruble devaluation.

All major automakers are refraining from making further investment plans in the country, trying to find new ways to counteract the sales downfall. However, there are some companies with an optimistic perception of the Russian market. One of them is Mercedes-Benz, Daimler’s CEO Dieter Zetsche recently revealing its company will remain committed to building a new plant in Russia.

Russian sales of new passenger cars and light commercial vehicles plunged in 2015 by 890,187 units in comparison with the same period of the previous year, marking a 35.7 percent steep decline. 1,601,126 cars have been sold in total, reaching the lowest level since the country’s previous recession in 2009, according to the Association of European Businesses.