New Forms of State Support Stimulated an Explosive Growth of the Automotive Market

23 august 2017

"The situation in the auto market is steadily improving and it is going to look quite promising by the end of the year," said Gleb Pokatovich, Deputy Head of the Analytical Center, speaking at the Conference as part of the 21st Moscow International Exhibition of Automotive Parts, Components, Car Maintenance Equipment and Products. "There are reasons to think so: We have already overcome the bottom and expect that the growth will continue in the current and next year."

Pokatovich reported that the state support of the automotive industry amounts to tens of billions of rubles and has been growing steadily over the past three years (only agriculture which ensures food security in the country receives more).

However, the multiplier effect of the state investments which was seen in 2011–2012 did not manifest itself by 2017. People want to buy cars, but they have no money, and in order to meet a reasonably high deferred demand, in the middle of the year the decision was made to maintain the previous support programs (concessional loans, recycling discounts, etc.), in addition to which new pinpoint programs appeared. "As a result, we see an explosive growth in the auto market," Pokatovich summed up.

Head of Department for Sectors of Economy, Grigory Mikryukov, elaborated upon the topic. According to him, it is within the competence of the Analytical Center to assess the effects of certain forms of state support. We note that a large amount of money is being invested in the automotive industry, it's another matter that most of it is received directly by the manufacturers in the form of direct industrial subsidies.

"We have a lot of questions to this instrument being used as a demand-side response," said Mikryukov. "Its efficiency was not very high last year. There is a fairly large set of conditions in which it can be more or less effective, and the question now is what needs to be done so that the industry – not only car makers but also manufacturers of auto components – could develop rapidly and enter the world market." Mikryukov invited representatives of the automotive parts sector, together with the auto manufacturers, to participate in the expert discussions of the Analytical Center to propose a strategy for the development of the automotive industry.