Russia said it will subsidize car loans for consumers buying any one of 30 foreign and domestic models, one of the most drastic moves yet to save an industry in which sales have slumped by one-third.
The car-loan subsidies, worth RUB 2 billion ($55.45 million) of this year’s federal budget, will compensate banks for charging lower rates on car loans, the ministry of industry and trade said in a statement.
The decision to help seven foreign brands along with two Russian ones is a surprise coming from a government that introduced sweeping measures in January to protect local car makers from foreign competition.
The soaring price of consumer credit has been blamed for a 33% year-on-year drop in foreign car sales in January. Analysts forecast a 20% to 50% sales slump this year, depending on how quickly lending to consumers resumes.
The ministry said it has earmarked another RUB 12.5 billion ($347 million) through 2011 to buy up unsold parts and commercial vehicles from such local producers as AvtoVAZ, as well as from Italy’s Fiat, Japan’s Isuzu.
A full list of parts and vehicles eligible for the two aid programs can be found on the government website www.minprom.gov.ru.
Almost the entire line of Russia’s state-controlled AvtoVAZ is eligible for subsidized loans, along with GM’s Chevrolet Niva, the Ford Focus, the Volkswagen Jetta, the Fiat Albea, the Kia Spectra and the Renault Logan.
The newest Siber sedan produced by Russia’s GAZ is not on the list of eligible vehicles. GAZ, controlled by indebted aluminium magnate Oleg Deripaska, is currently seeking to restructure part of its debt.
Russia began a 30% import duty on second-hand cars on Jan. 1 to prop up the struggling domestic car industry. The move stirred concerns about protectionism from Russia’s trading partners, and led to large-scale protests in major Russian cities that rely on the second-hand car industry. (Reuters)