Cars being accumulated at storage facilities will be sold at high discounts.
Russian automakers have prepared special offers within the programme for scrapping old cars. AvtoVAZ will sell its classic Lada models and Lada Kalina at a discount of several thousand roubles. The owners of old cars wishing to buy a UAZ vehicle or some Ford models will receive even larger bonuses. Prime Minister Vladimir Putin has called on Russians not to postpone the purchase of a new car. According to him, the terms of purchase are now most advantageous thanks to the government's trade-in programme. The car makers offer a disposal bonus of 50,000 roubles and a loan at low interest rates subsidised by the state.
"There is no certainty that these terms will apply next year," the Prime Minister warned.
He also set forth a number of problems that must be solved. The top priority is to remove obsolete vehicles from the market and introduce modern technical regulations that improve car safety standards and reduce emissions.
According to Mr Putin, "we'll make the air cleaner in our cities and, more importantly, we'll save thousands of lives." Besides, Russian car-making industry must become more competitive.
AvtoVAZ rounds off prices
For some automakers, the widely publicised programme of the Ministry of Industry and Trade for scrapping old cars is an opportunity to boost sales and get rid of cars that have been kept too long in storage facilities. National brands such as AvtoVAZ and UAZ plan to stimulate buyers by large discounts. The Togliatti auto giant AvtoVAZ will offer these subsidies on the basic models of the Lada 2105 and Lada Kalina.
Combined with the car disposal bonus of 50,000 roubles, the classic Lada model will be sold for 99,000 roubles (currently the price starts at 163,576 roubles) and the more modern Lada Kalina for 199,000 roubles (currently at 256,490 roubles). Thus, the AvtoVAZ discounts on the Lada and Lada Kalina amount to 14,576 and 7,490 roubles, respectively.
When purchasing the new car, the buyer will pay part of the price in cash (199,000 or 99,000 roubles in the above cases), and the other part with a car disposal certificate, an AvtoVAZ spokesman says.
"Selling classic Lada and Lada Kalina models at a discount is absolutely the right way to go," says Sevastian Kozitsyn, an analyst with BrokerCreditService. In a conversation with a Gazeta correspondent, he claimed that the programme would help prevent building excess car stocks, remove the prospect of another price hike by AvtoVAZ, and make the disposal programme more effective for potential clients.
Ulyanovsk Auto Works
The Ulyanovsk Auto Works (UAZ) has also met the car scrapping campaign head on. The plant says in a press release that "the Ulyanovsk Region government has decided to support the old car disposal programme and to offer another 50,000 roubles to every buyer of a UAZ vehicle who will first hand over his own car to scrap dealers. The Ulyanovsk auto works also offers a 20,000 rouble discount for residents of Ulyanovsk and the Ulyanovsk Region under the above programme."
The discount of 70,000 roubles will apply to all UAZ models and be added to the 50,000 rouble discount already offered under the old car disposal programme.
"Thus, residents of Ulyanovsk and the Ulyanovsk Region will be able to buy a new model of the UAZ-469 cross-country vehicle for 179,000 roubles, down from its retail price of 299,000 roubles. The UAZ Patriot model, to which a 15,000 rouble discount will apply till March 31, can be bought in Ulyanovsk for 355,000 roubles," the plant reports.
The Ford plant has also prepared special offers in connection with the programme. The plant reported in February that the buyers of the cheapest three-door Ford model would get a significant discount on a new car – down from 497,000 to 389,000 roubles. A five-door hatchback will be sold for 399,000 roubles and a sedan for 409,000 roubles.
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Shifting timeframe
Igor Komarov, head of AvtoVAZ, said that "in 2012, AvtoVAZ will produce a car on the basis of the BO/Logan platform under the Lada brand. In 2012-2013, we must launch the production of cars under Renault and Nissan brands on the basis of the same BO/Logan platform." Previously, head of the Russian Technologies Corporation, Sergei Chemezov, had named earlier dates: late 2011 and early 2012, respectively.
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Car scrapping programme
The programme of the Ministry of Industry and Trade aimed at stimulating the demand for new cars will be in effect from March 8 - November 1, 2010. Under the programme, Russians can hand over any car ten years old or older for scrap in exchange for a certificate entitling the holder to a 50,000 rouble discount toward the purchase of a new car made or assembled in Russia. The government has allocated over 11 billion roubles for this purpose.
By Asatur Bisembin