Russian car sales fell in 2013 and face another weak year as a
stuttering economy puts off buyers, according to lobby group the
Association of European Businesses (AEB).
The subsidies will be for research and development, to support jobs
and to compensate for some costs related to meeting tighter exhaust
emission standards, the government said in a statement on its website.
Russia's largest carmaker is Avtovaz, maker of the Lada, which is
set to be controlled by Franco-Japanese alliance Renault-Nissan <RENA.PA>
<7201.T> by mid-2014. Other foreign carmakers have invested heavily
in the country, such as Ford <F.N> and General Motors <GM.N>.
Russia introduced a recycling fee for imported cars in 2012,
angering the European Union which argued the fee — to cover the cost
of scrapping a car when it becomes too old to drive — was not
compatible with Russia's membership of the World Trade Organization
The United States and Japan also complained about the levy.
The Russian government responded last year by saying it would apply
the same fee to all cars — whether imported or manufactured in
Russia — and some analysts said the latest support was a way of
offsetting the cost for domestic carmakers.
"The introduction of subsidies will reinstate such government
support to the industry at no additional cost to the budget,"
analysts at Bank of America said in a research note.
The WTO was not immediately available for comment.
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Russia last year tried to prop up car sales with credit incentives.
The program ended in December.
The government said Russia aimed to increase production of cars to
3.1 million units a year and light commercial vehicles to 280,000
units per year, without giving comparative figures.
Data from the AEB last week said car and light commercial vehicle
sales are expected to fall by 1.6 percent in Russia in 2014 to 2.73
($1 = 33.5492 Russian rubles)
(Reporting by Megan Davies; additional
reporting by Gleb Stolyarov; editing by Polina Devitt, Douglas
Busvine and Mark Potter)
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