Translated material
Junk and workshop
Vladimir Putin promises to increase duties on new foreign cars
Russia will increase duties on foreign cars gradually - first on used cars, then on new ones imported from abroad (now the duty reaches 30%). This will create an incentive for foreign companies to open their production facilities in the country, Prime Minister Vladimir Putin said yesterday in an interview with the Rossiya-24 TV channel. In his opinion, foreign companies operating in Russia should gradually transfer production technologies, increasing the level of training of local specialists.The statement by the head of government deprives foreign automakers of the hope for a reduction in duties that appeared in August. The Ministry of Economic Development proposed returning duties on new foreign cars to the pre-crisis level - 25%. But the prime minister believes that these measures will not come as a surprise to automakers, because Russia, according to him, several years ago announced to foreign automakers interested in its market: “Guys, let’s live together!” According to the head of government, foreign automakers must understand that Russia will protect its own production. “No country, especially Russia, will allow you to dump rubbish on our market and turn Russia into a trash heap for your used equipment,” Vladimir Putin emphasized.
The authorities are aware that consumers still need foreign products, and automakers “cannot immediately jump into the Russian market and expand production,” the prime minister continued. “Let's agree as follows: we will not do anything in the direction of increasing customs duties now. But here’s a schedule: in such and such years we will begin to gradually raise customs tariffs, first on the import of used equipment, then we will gradually increase customs duties on new cars and finished products,” Mr. Putin noted, addressing foreign automakers. - We are not a member of the WTO, we can afford it. At the same time, we do not want to undermine your business in Russia, come to us and set up your production here. But we want you to transfer technologies, skills, and increase the level of labor productivity and technical training of Russian specialists.”
All this should be provided for in contracts signed by the Ministry of Industry and Trade with foreign automakers, the prime minister noted.
In January 2009, Russia increased duties on car imports in order to support the domestic auto industry during the crisis. Duties on passenger cars with a service life of one to five years increased from an average of 25 to 30% of the customs value with a proportional increase in the specific rate calculated in euros (per 1 cubic cm of engine volume). At the same time, not seven-year-old cars, but five-year-old cars fell into the used category. But already in March, the Ministry of Economic Development proposed that the government reduce duties on new cars from 30 to 25%. The Ministry of Industry and Trade opposed it, saying that the reduction of duties was not provided for in the concept of development of the automobile industry until 2020. According to its representatives, maintaining the current customs rates on car imports for the next few years is a necessary condition for the emergence of a full-fledged automobile industry in Russia with the participation of global players. It will be possible to return to the idea of reducing duties, including on new cars, no earlier than 2015, the Ministry of Industry and Trade said.
Nevertheless, the market expected the position of the Russian authorities to soften. And First Deputy Prime Minister Igor Shuvalov said in early August that the government may consider reducing duties on new foreign cars.
The industrial assembly regime for foreign automakers was introduced in 2005 and allowed the import of components at a rate of 0-5% instead of 5-15%, producing at least 25 thousand cars per year. Preferential agreements were signed before November 2007 for a period of seven years. General Motors, Nissan, Toyota, Ford, Renault and Volkswagen are currently operating in this mode in Russia. In August, the Ministry of Industry and Trade announced that it was tightening industrial assembly rules for foreign cars. Receiving benefits for the import of components, automakers must produce at least 300 thousand cars per year, 200 thousand engines and/or gearboxes, and also create a body stamping production facility and a development and engineering center in Russia. In addition, the average localization level for the plant’s model range in the sixth year after the conclusion of an agreement on industrial assembly should be at least 60% (previously - 30%). The Ministry of Industry and Trade intends to introduce a new industrial assembly regime from mid-September, Alexey Rakhmanov, director of the automotive industry department, said last week.
According to PricewaterhouseCoopers, in 2009, 360 thousand foreign cars were assembled in Russia. As PwC partner Stanley Ruth noted, the share of Russian-made foreign cars in the first half of 2010 exceeded 30%. But the Russian market is still unstable, and automakers are in no hurry to open new enterprises here, experts previously told Vremya Novostey.