On February 9, Prime Minister Vladimir Putin requested a draft resolution on new car loan subsidised interest rates for the purchase of Russian-made cars. The government intends to earmark 2 billion roubles for this purpose promising to compensate 8% of the annual interest. The list of eligible cars includes not only Ladas but also foreign models assembled in Russia. This means that about 64,000 new car buyers will be able to apply for subsidies, while the Kaliningrad-based Avtotor and Taganrog assembly plants (TagAZ) will find themselves out of play.
At a government presidium meeting on February 9, Vladimir Putin summed up the programme of assistance to the Russian automotive industry. According to Putin's Protocol drafted after his meeting with automakers in Naberezhnye Chelny in December 2008, a programme for granting easy-term loans for the purchase of Russian-made cars should have been worked out by February 1. However, the programme has yet to materialise, and the lending mechanism has not been fully designed.
Deputy Prime Minister Igor Sechin promised to submit the document to Putin for a signature by the end of the day. According to Putin, the government will allocate 2 billion roubles from the budget to subsidise auto loans.
The Ministry of Industry and Trade told RBC daily that a draft resolution defining new car loan criteria under the programme would be submitted to the prime minister. The government will subsidise two-thirds of the Central Bank's refinancing rate, i.e., 8% of the loan amount a year. The programme will cover the purchase of cars that retail for no more than 350,000 roubles. According to the Ministry of Industry and Trade, the list of eligible cars has not been finalised, but it is clear that it will include models assembled by both Russian manufacturers and by foreign makers who assemble models in Russia. However, the list will exclude TagAZ and Avtotor models: the Hyundai Accent and the Chevrolet Lacetti. The list of eligible models includes Chevrolet Niva, Kia Spectra, Fiat Albea, Renault Logan, UAZ Hunter and the Skoda Fabia. There is no decision on Ford Focus yet: though its price does not meet the required criterion, it has become a very popular model in Russia.
A source at a sectoral ministry said in a conversation with RBC daily that the resolution might be signed by the prime minister this week and immediately put into effect. Nevertheless, new car buyers would still only be able to purchase auto loans by spring. The Ministry of Economic Development is now devising the lending mechanism, but it is clear that the loans will be issued only by banks with state participation.
However, few buyers will qualify for the benefits. With a down payment of 30% and the total 2009 programme amount at 2 billion roubles (a subsidy for one car would amount to about 31,400 roubles), the subsidies will cover only 64,000 cars, which is a small percent of Russian market sales. According to Sergei Tselikov, head of the Autostat analytical agency, the government must give three to four times more money a year in order to stimulate sales. He also said that the Russian automakers' unsold inventory (including those of AvtoVAZ and foreign car assembly plants in Russia) were close to 200,000 cars now.
Yulia Karulina