Government measures to support demand in Russian auto industry currently sufficient to increase car output - Putin

MOSCOW. April 4 (Interfax) - Current state support measures for demand in the Russian auto industry are currently optimal for solving the main short-term task in the industry - increasing car production, President Vladimir Putin said.

The issue of expanding one of the primary measures, the program for preferential car loans, under which Russians are provided with discounts of 20% (in the Far East - 25%) on cars worth up to 2 million rubles, was brought up to Putin during a meeting in Tula with workers from the Tulazheldormash plant on Tuesday. An employee named Dmitry Makarov asked if, for example, there were plans to expand subsidies for cars worth up to 2.5-3 million rubles.

"This subsidy program, of course, was aimed primarily at helping people buy a car due to rising prices and inflation, and supporting the auto industry. And these measures to support the auto industry, in principle, are enough to ensure that in the near future, there is an increase in the production volume of vehicles, including of the most in-demand cars," Putin replied.

The auto industry has become one of the sectors most affected by the sanctions, with production in the industry having fallen over 60%, the president said. He also noted that thanks to government and regional authorities, automobile industry enterprises are "working well," but "the problem is to produce the number of cars we need, of course, with appropriately high quality."

"If we raise the level of support during a shortage of cars, this will only lead to one thing: a further increase in prices. We have retained these elements of support for certain categories of citizens. In general, the best way to solve this problem is to increase output of the most in-demand cars. And I'm sure we will do this in the near future," Putin said.

"Having a car is one of the signs of well-being and the well-being of a family." "We have a very large amount of cars that are privately owned. But, of course, cars require constant replacement, it's true," the Russian head of state said.

Avtovaz , which manufactures Lada, is the main beneficiary of the government's demand support program for the Russian auto industry. The president of the company, Maxim Sokolov, said at parliamentary hearings in the Federation Council at the end of February that the limit of state support for preferential loans for gas-powered cars, meant to be within a general limit of 5 billion rubles, which the company considers insufficient, had actually already been chosen, even then.

"True, 1.5 billion rubles out of the 5 billion rubles were blocked for the electric car program. Although, if memory serves, fewer than 20 electric cars were sold in January throughout Russia," Sokolov complained.

On March 30, Russia's Ministry of Industry and Trade announced the redistribution of funds for the program within the current limit of 5 billion rubles, thus extending its operation, but without widening its scope.

On the same day, Avtovaz announced that due to problems with the supply of components for their assembly line, it would not be able to produce Ladas without interruption at the end of May. In this regard, the company shifted its corporate holidays to May 29 through June 19 from July 24 through August 13, as previously planned.

According to Rosstat, in January-February 2023, 53,900 cars were produced in Russia, which is 73.5% fewer than in the same period the previous year. Avtovaz sales for the first two months of this year, according to the Association of European Businesses, grew year-on-year by 1.2%, to 40,905 units.