There will be no subsidies for the purchase of cars.

Despite the fall in the car market, the Russian car industry will not receive the expected government support in the form of a preferential car loan program in the near future: according to Kommersant's sources, there is no money in the budget for it yet. The Ministry of Industry and Trade believes that the industry will have enough subsidies for gas engine equipment, compensation for recycling fees and government procurement of domestic equipment. Market participants welcome the measures, but emphasize that they do not have such a serious effect and “it will be difficult” without preferential loans. However, experts believe that the government may still return to the program if the market situation worsens.

Photo: Dmitry Azarov, Kommersant / buy photo

Yesterday, the head of the Ministry of Industry and Trade Denis Manturov, at a meeting with the heads of the largest Russian automobile plants, postponed indefinitely the resumption of the preferential car loan program that the companies were counting on. The minister said that he could hardly promise any quick measures in this regard. “We provided significant support last year,” he added.

The preferential car loan program started in July 2013. During its operation, 276 thousand cars were sold. According to the Ministry of Industry and Trade, 80% of all cars sold under the program were made in Russia, the most popular were Lada (23.2% of all sales under the program), Chevrolet (11.4%), Renault (11.2%), KIA ( 8.9%), Hyundai (6.8%). But in December the program was completed ahead of schedule. The Ministry of Industry and Trade explained that 8.6 billion rubles allocated from the budget. have been spent and no additional subsidies are planned. However, in January, Deputy Prime Minister Arkady Dvorkovich said that based on the results of the first quarter, a decision could be made to resume it. But now it is clear that this will not happen. Denis Manturov offered other types of support to the auto industry.

The main ones should be subsidies to manufacturers of buses and equipment for housing and communal services using gas engine fuel (to be allocated in May when the budget is adjusted) and a “national regime” for government procurement of vehicles. The government has already submitted a draft resolution that will oblige federal and municipal executive authorities to purchase cars produced in the Customs Union. As Alexander Morozov, head of the department of transport and special mechanical engineering of the Ministry of Industry and Trade, explained to Kommersant, during government procurement, the “national regime” will also apply to agricultural, municipal, and railway equipment. The decree should come into force on April 1, with the exception of trams and metro cars, for which the deadline is the beginning of 2015.

According to Denis Manturov, “support for the auto industry will primarily affect freight and bus transport.” Market participants interviewed by Kommersant confirm that the measures are mainly aimed at supporting light commercial vehicles (LCVs). A Kommersant source in the automotive industry estimates the amount of funds needed in 2014 to support manufacturers of gas engine equipment at 3-5 billion rubles. Deputy head of the Ministry of Industry and Trade Alexey Rakhmanov told Kommersant that negotiations are currently underway with the Ministry of Finance on the allocation of funds for subsidies. In addition, the state intends to allocate 84 billion rubles. to compensate for part of the “production costs” of Russian car factories, which should indirectly compensate for the costs of paying the recycling fee, 5.3 billion rubles. for technical re-equipment of enterprises and 3 billion rubles. for the transportation of cars produced in the Far East.

The car market needs government support because car sales have been falling for almost a year (in February, according to the Association of European Businesses, the drop was 2%). From the presentation of Alexey Rakhmanov it follows that it is unlikely that it will be possible to stop the decline in 2014. According to the most optimistic forecast of the Ministry of Industry and Trade (43.2 rubles per €1, GDP growth - 2.5%), sales of passenger cars may fall by the end of the year by 6.5%, LCVs - by 9%, trucks and buses - by 5% %. With the average option (49.61 rubles per €1 and GDP growth of 1.8%), the demand for cars will decrease by 9.1%, for LCVs - by 15%, for trucks - by 9.5%, and for buses - by 18%. Under a pessimistic development scenario (RUB 50.2 per €1 and GDP growth of 1.5%), sales of passenger cars will fall by 10.1%, trucks by 14%, and LCVs and buses by 30%. Yesterday, Pavel Sereda, development director of the LCV division of the GAZ group, said that at the end of 2014 the group expects a drop in sales of these cars by 15-20%. AvtoVAZ, according to the most pessimistic scenario, expects the market to decline by 20%, although it is likely that sales will remain at the 2013 level.

Kommersant's sources in the car market believe that there will be no extension of the car loan program due to uncertainty with its financing due to cuts in budget expenses. At the same time, Kommersant’s sources among manufacturers note that without these measures “it will be difficult.” According to them, government purchases of Russian products and subsidies for gas engines are also necessary, but do not have such a direct effect on stimulating the market. Renault told Kommersant that they hope that “in the future the government will find an opportunity to stimulate the industry in some other ways.” The GAZ group told Kommersant that from the point of view of effectiveness, all the proposed measures are necessary, and recalled that during the period of falling sales in 2009, the situation improved thanks to government procurement of equipment and modernization of the model range. But, the group noted, the most significant psychological factor would be preferential car loans, although this is not the main measure to stimulate LCV sales.

Senior manager of PwC in Russia Sergei Litvinenko does not rule out that the state will return to the issue of preferential car loans this year if the situation worsens. On the other hand, he believes that the effect of preferential car loans is short-term and more effective measures would be more appropriate (for example, a program for recycling old cars).

Yulia Gallyamova; Egor Popov, Nizhny Novgorod

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