Medvedev orders 50 bln rbl aid to car industry in 2016

TOLYATTI, Samara Region, Jan 22 (PRIME) -- Prime Minister Dmitry Medvedev has signed a ruling to provide state support of about 50 billion rubles to the Russian car industry in 2016, he said during a visit to top car maker AvtoVAZ on Friday.

“The industry will receive the largest volume of state support among all non-military branches this year. This program is aimed at creating conditions for the revival of Russian car makers’ production growth. The total volume of funding is expected to stand at about 50 billion rubles,” he said.

“We will also launch two new projects. Which? The first encompasses support to exports of Russian cars and car components by compensating part of transportation costs and expenses to adjust our vehicles to our buyers’ standards.”

The second program foresees upgrade of the ambulance fleet. The government will provide necessary funding to regions on the purpose, the prime minister said.

Industry and Trade Minister Denis Manturov said that it will be enough to provide 3.3 billion rubles to support exports of Russian cars in 2016 against 6.3 billion rubles planned earlier.

“In the future, we plan to foster further development of the industry without continuing state support from the budget,” the minister also said.

Russian authorities have already decided to provide 20 billion rubles of subsidies to support demand for cars in January–June. The state support covers leasing, beneficial car lending, trade-in and scrappage programs.

CAR MARKET UNLIKELY TO RISE, NEEDS SPECIAL SUPPORT

The situation in the Russian car industry has not improved since early 2015 and authorities must develop measures of support to this key industry, Medvedev said.

“We have discussed the situation in the car industry recently, the New Year came, and you know, frankly speaking, the situation has not improved. That is why we must discuss measures of support to the car industry once more, to define key directions of the 2025 strategy,” the official said.

The industry must be supported because it creates a significant multiplier effect, Medvedev said.

The Russian car market is unlikely to rise significantly soon because of the ruble devaluation.

Car sales fell by around one third in 2015, but experts’ forecasts are even more pessimistic, Medvedev said. A lower slump was prevented with the help of state support, which amounted to about 43 billion rubles last year.

“We will continue this policy this year. But nevertheless, our market is unlikely to grow significantly in the near term, according to current estimates,” Medvedev said. “Growth is limited by growing prices for car parts and the ruble rate.”

(83.5913 rubles – U.S. $1)

End