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Russia unveils package for crisis-hit auto industry
2008-12-19
MOSCOW (AFP) - Prime Minister Vladimir Putin unveiled a lavish package on Friday to encourage Russians to buy only Russian-made vehicles, in a bid to help struggling domestic automakers overcome the economic crisis. On a symbolic visit to the town of Naberezhniye Chelny, home to Russian truck maker Kamaz, Putin described imports of foreign cars as "absolutely inadmissible" in times of crisis. "The most important task is to resuscitate consumer demand in the population. We need to support people," Putin said in comments broadcast on state television from the industrial town in the republic of Tatarstan. The government has faced protests in the Russian Far East against its decision earlier this month to raise tariffs on second-hand imported cars. About 6,000 people held protest rallies on Sunday in Russia's far eastern city of Vladivostok in a region where 200,000 people work in the import, sales and servicing of mainly Japanese-made foreign cars. Putin said his government would rather pay to ship Russian-made cars across several timezones to Russia's Far East rather than see its residents buy Japanese models. He said the government would fully compensate Russian Railways for the cost of transporting the cars to the Far East. While analysts welcomed the move to support consumers rather than carmakers directly, they said a decision to ship cars to Far East did not make economic sense. "This is total nonsense," said Gennady Sukhanov, an automotive analyst with Troika Dialog. "I myself am from Vladivostok. People there will not buy Russian brands," he said, estimating that it would cost just under 200 million dollars to ship some 100,000 cars to the region annually. Putin said that the government could help subsidise car loans on locally produced cars, costing 350,000 rubles (12,500 dollars) or less, in a temporary measure to be in force next year. "I would like to address those citizens who would like to buy a car -- you would be better off doing it in 2009," he said. Curiously, most Russian officials, including President Dmitry Medvedev and Putin himself, appear to share the predilection of many of their compatriots for foreign brands. "What right does he have, who is he to tell people what to eat, wear and drive?" opposition politician Boris Nemtsov said, speaking on the Ekho of Moscow radio. "Mr Putin should start with himself." One sign at Sunday's protest in Vladivostok read: "Mr. Putin, why do you get driven about in a Mercedes? Why not a Volga? Aren't you a patriot?" Thousands of drivers are scheduled to protest again against higher tariffs on imported cars in Russia's Far East on Sunday, in demonstrations that some analysts believe could spill into wider social unrest. Putin's meeting in Naberezhniye Chelny -- where he also chatted to workers on the factory floor -- is widely seen as a sign that the threat of nationwide social unrest is not lost on the Kremlin. With the economic crisis eating away at Russians' savings, demand has dropped dramatically in its once booming auto market. Major foreign and domestic carmakers are adjusting production plans, with top Russian automotive producers AvtoVAZ, GAZ and Kamaz turning to state for help. All major local carmakers as well as the Russian operations of Ford, Renault and General Motors have announced plans to halt production in Russia for around a month. Putin also promised help for foreign carmakers assembling cars in Russia, saying he did not see a principal difference between a Ford plant near St. Petersburg and AvtoVAZ facilities in Tolyatti. Less than 50 percent of all new cars sold in Russia this year were produced in Russia, according to a report published this week by PricewaterhouseCoopers. Car sales could plunge anywhere between 15 percent and 45 percent next year due to growing unemployment, slow pace of pay raises and a ruble devaluation, PwC said.
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