Ukraine to launch program for subsidizing car loans for purchases of cars assembled in country

MOSCOW. Dec 1 (Interfax) - The automobile industry of Ukraine has a future, and the state will support its development, in particular, it is planning to launch soon a program for subsidizing interest rates on consumer car loans for purchases of automobiles assembled in the country, Rostislav Shurma, deputy head of the presidential office, said.

"What we, as a government, are planning to do specifically to motivate and develop the automobile industry in the country [...] is to encourage and deliberately increase the demand on automobiles specially assembled in Ukraine," Ukrainian media outlets quoted him as saying in his speech made by videoconferencing at the Manufacturing Day Ukraine event at the Solomonovo Industrial Park in the Zakarpatye region on Thursday.

Interest rates are quite high in Ukraine, and it makes loans quite expensive for the population, Shurma said. "This is why we are soon launching the program for subsidizing interest rates, which will enable citizens to get car loans at preferential interest rates," he said.

The second step will be consolidating purchases of government bodies and purchases of goods from local manufacturers in order to motivate them and increase production, he said. The state is currently a major player in the economy creating up to 50% of total demand in the country, Shurma said.

The third step is creating a tax regime for the domestic producer of electric cars under which it could compete with their import, which is almost free from payment of duties, VAT, excises and fees, Shurma said.

Overall, Ukraine is interested in the development of its automobile industry, he said. The automobile industry is one of the key elements of the economy, creates jobs and taxes and contributes to both GDP and the balance of payments, in which import of automobiles is possibly one of the largest items at present.

Ukraine's automobile industry has a future, because the country has quite a capacious domestic market, Shurma said. "It gets reduced to 200,000 automobiles at worst times. It was about 600,000 passenger cars a year at better times, and all of that happened without appropriate financial instruments enabling people to receive a competitive loan at a competitive rate," he said.

Ukraine has all necessary component parts to manufacture and assemble cars in the country, he said. There is also plenty manufacturers of component parts supplying assembly parts and components to all major automobile corporations in the world.

Ukraine also has qualified people who received training and have backgrounds in engineering, he said. "And we have all necessary minerals to make automobiles of the future, especially referring to lithium and graphite, which are the key chemical elements for making the main component of cars of the future, electric cars," Shurma said.

The government has confidence in electric cars among its global priorities, this is why all possible effort will be made as part of the enabling policy to convert production and consumption to electric cars and localize production in Ukraine, he said.

The production site in Zakarpatye, which was hosting the Manufacturing Day, is perhaps one of the best sites for launching such production, Shurma said.

"We believe that it will become a starting point to increase once again production of classic cars with internal combustion engines first, and the next step is creating production of electric cars on this site and the entire value chain around it," he said.