The Russian car industry will not leave in trouble

The Russian car industry will not leave in trouble

Before the crisis, the industry has developed rapidly, said Dmitry Medvedev, speaking at a meeting on the automotive industry. However, according to him, in the near future the market will not grow significantly, as this is not conducive to the ruble.

Togliatti, Russia/MOSCOW, 22 Jan. Prime Minister Dmitry Medvedev signed a decree on the allocation of 50 billion rubles in 2016 to support programme demand and production in this sector.

“The industry will receive in the current year, the largest amount of subsidies from all civil sectors. Its aim, of this program, to lay the groundwork for renewed growth of production of Russian cars. It is anticipated that total funding will be about 50 billion rubles,” — said Medvedev, speaking Friday at a meeting on the current status of the automotive industry of the Russian Federation and the main directions of its development strategy for the period up to 2025.

Last year the state supported the demand of the market, highlighting 43,3 billion rubles.

The head of government noted that before the crisis the industry has developed rapidly, however in the near future the market will not grow significantly, as this is not conducive to the ruble.

Taken after the premiere of the word Minister of industry and trade of RF, Denis Manturov took to describe in detail, what will the designated funds. “On the program of fleet renewal through trade-in and recycling will be directed 22,5 billion roubles; preferential leasing – 5 billion (rubles — ed.); preferential loans to 2.3 billion rubles (for the year 2016 — ed.)”, — said Manturov.

“Plus — 9.9 billion rubles will be allocated for execution of state obligations for programs that were implemented in 2013 and 2015. Subsidy for reimbursement of expenses on investment loans with the adjustments will amount to 6.3 billion rubles. Also very important measures that will ensure the purchase of municipal gas engine transport, urban electric transport, is 3 and 1 billion (rubles — ed.) accordingly,” continued the Minister.

Initially to support exports at the expense of compensation of expenses for transportation to the Russian border, and adaptation and homologation of vehicles under the requirements of export markets anticipated the amount of 6.3 billion rubles, said Manturov. “We have prepared the offers on adjustment. From 6.3 billion to 3.3 (billion rubles — ed.), we believe, will be enough to take this new measure, and 3 billion is for ambulances”, he said.

The new strategy of automobile industry development, the Ministry proposes to proceed on a conservative scenario download production with optimization of inefficient facilities and increasing the level of localization.

Another promising direction in terms of the devaluation of the ruble is increasing exports, I’m sure Manturov. “In the medium term (three to five years) it will be necessary to provide support for the vector mode of the current budget commitments that will allow by 2020 to increase supplies to foreign markets more than doubled, and by 2025 we aim to increase the share of exports in total production from today’s 7.7% to 25%,” — said the Minister.

Managers of automobile plants, meanwhile, are very wary speak about plans for the coming year. So, “GAZ Group” expects to sustain sales and production in 2016 at the level of last year, said group President Vadim Sorokin. And capital expenditures in the current year, as well as in previous, the company intends to Finance from its own funds, said Vice-President of “GAZ Group”, Elena Matveeva. Plans to keep production at last year’s level and told the President of “Avtotor-Holding” Valery Draganov, in General, adding that now a solid forecast can be done.

“AvtoVAZ” at the end of last year said that since mid-February, goes on four-day work week for six months, in order to avoid layoffs. However, the reduction would be. As stated by the labor Minister Maxim Topilin, at “AVTOVAZ” this year can be reduced to 2 thousand people, but this is a planned reduction. Meanwhile, Vladimir Putin said that the Russian authorities managed to prevent the suspension of production and layoffs of people. He stressed that in many respects it became possible thanks to the implementation of the measures adopted by the government last year.

According to the Association of European businesses (AEB), sales of new cars and light commercial vehicles (LCV) in Russia in 2015 decreased compared with 2014 by 35,73%, to 1.6 million units. In 2016 the AEB predicts reduction of sales of new cars and light commercial vehicles (LCV) in Russia by 4.7% compared with the results of the 2015 year to 1.53 million units.