Car rates

Putin says government must support domestic auto industry and wants new plan soon

LONDON, June 16 (Reuters) – Russian President Vladimir Putin on Thursday ordered his government to quickly come up with new measures to support the domestic auto industry, which has seen sales plummet since the invasion of Ukraine.

Amid a slump in demand from Russian buyers and severe logistical problems following Western sanctions, car sales fell a record 83.5% in May, according to data from the Association of European Enterprises (AEB). Read more

“I would like to ask the government to tell us in detail what prompt measures it is taking to support the auto industry and stabilize the domestic market,” Putin said during a meeting with officials broadcast on state television.

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The Interfax news agency quoted him as saying the government should come up with an updated plan by September 1.

Industry and Trade Minister Denis Manturov said Moscow would allocate 20.7 billion rubles ($377 million) this year to support demand for cars, Interfax reported.

Some 10.2 billion rubles would be spent to resume car loans, with the rest split between support for preferential leasing rates as well as discounts for electric and gasoline vehicles.

“This is what should be implemented in the near future to stimulate the market precisely for products that are freely produced and can be supplied to our consumers,” he said.

According to the Russian statistics agency Rosstat, car prices have jumped nearly 50% since the start of the year, depressing demand in a country where household incomes have fallen while inflation is near the highest levels. 20 year highs.

In recent weeks, a series of officials have warned of a possible fall in demand which could deepen the economic crisis, which is already expected to be the worst in at least two decades.

Despite a high-profile import substitution campaign, the Russian automotive industry had remained heavily dependent on foreign investment and equipment.

Lada Avtovaz, Russia’s largest automaker, halted production for more than two months citing a shortage of electronic parts. Read more

French car giant Renault (RENA.PA) struck a deal in May to sell its controlling stake in Avtovaz to a Russian scientific institute, reportedly for the token sum of a single ruble, with a six-year buyout option. Read more

($1 = 54.8750 rubles)

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Reporting by Guy Faulconbridge in London and David Ljunggren in Ottawa Editing by Gareth Jones and Jonathan Oatis

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