The Government launches a new form of support to the automotive industry – the budget will share automobile export costs with automotive groups. The draft resolution of the Government with new subsidy provision rules was published by the Ministry of Industry and Trade for public discussion. This year, RUB 3.3 billion will be allocated for the transportation of vehicles to the borders, adaptation of models to the technical requirements of export markets and certification procedures abroad. This will supplement the traditional set of measures being used to stimulate domestic demand.
We can output more than 3 million motor-vehicles a year
“The production capacity exceeds the current volume of the Russian automotive market greatly,” commented on the situation to Rossiyskaya Gazeta Mr. Grigory Mikryukov, the Deputy Head of the Department for Sectors of Economy of the Analytical Center. “We can produce over 3 mln cars a year, but actually produced 1.2 mln vehicles in 2015. At present, our key export markets are the CIS countries that account for 88 per cent of the exports in 2015. However, they also have some difficulties now. We have to explore new markets. The question is which ones.”
It is not clear yet how RUB 3.3 bln will be distributed among specific areas to be supported: subsidies for transportation, adaptation of vehicles to the technical requirements of foreign markets, and certification. The amount of funds itself is sufficient, thinks Mr. Mikryukov. “If all these funds are applied to subsidize transportation, they will be sufficient for 150-200 thousand cars, which exceeds the entire exports for the past year (97.7 thou cars),” said the expert.
Meanwhile, certification efforts are the most important thing now, as this is a valid method to protect any market, and a lot of efforts and costs are required to overcome the barrier, believes Mr. Mikryukov. “How much funds are required depends on markets that domestic producers plan to enter. Entering England is one thing and Vietnam is another. Some clarity has to be added to that,” said the expert.