Russia To Spend $20b On Auto Industry Stimulus

Edward Niedermeyer
by Edward Niedermeyer
russia to spend 20b on auto industry stimulus

Vladimir Putin has announced that his government will spend $19.6b (584 billion rubles) on auto-sector stimulus, with spending planned on technology development, employee re-training, direct subsidies, and cash-for-clunker-style consumer stimulus. Another $20b of investment is expected from foreign automakers. These measures are aimed at a host of of ills besetting the Russian auto industry and market, ranging from what the government describes as a 4-7 year technological deficit, and a 50 percent drop in sales last year.

Perhaps the biggest beneficiary of the stimulus is AvtoVAZ, which has been hanging on to survival through previous government assistance ( Renault lost $370m due to its stake in VAZ, which some had suggested it should up to full ownership for the princely sum of $1). AvtoVAZ will receive 28b rubles, and the government will reserve another 10b rubles for the firm if it completes a reorganization. One of the conditions of VAZ’s reorganization is that it increase development spending, a condition the government hopes will improve the Russian industry’s average development spending of 1 percent of earnings.

In contrast to the huge sums being handed over to Russian auto firms, Russia’s new cash-for-clunkers consumer stimulus program is remarkably small, especially considering the dramatic declines in Russian vehicle sales. The government will offer $2,350 rebates towards the purchase of a Russian-built vehicle (with a ten year old trade-in), but has budgeted for a mere 200,000 rebates. And the relatively small size isn’t the only concern for analysts who argue that Russia’s car market is in for more tough times. Businessweek reports that a lack of transparency and fears of corruption lead many to believe that the stimulus will not do much to revive new-car demand in Russia.

But hey, at least it will bring the price of a Lada 2105 (pictured above) to a mere $3,330. Great success!

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  • Garak Garak on Mar 09, 2010

    You all should remember that Lada 2105 is based on the Fiat 124, which won the prestigious Car of the Year award! In 1967. Truth to be told, they've planned to shut down production of the boxy 1960s cars many times, but people won't buy the horrible FWD replacements. Lada sales for example in Finland fell about 90% when the RWD models were discontinued in 1997 due to tightening safety and noise regs.

  • Tassos While I sure am not interested in any big and heavy crossover, even if it is a Honda, I got to say that this thing's "up to 300" mile range is really dismal.But why? You'll ask. It's not bad. That is not good enough. When we have Model Ss with certified EPA 402 mile real range, and many years later (ie today) this brand new wannabe Tesla killer gets barely 300, while it should get 500, using the progress in the years after the S it came out, it is really disappointing. And sure as hell "up to" 300 does not mean even 300 at all.The price is not bad, since it is in devalued, worthless, Idiot Joe Briben 2023 dollars. If you don't mind a Crossover, it may actually be a good place to put your $, compared to a ... savings account above all. And the top should easily exceed $65k, if not $70k, when it comes out (with another 10% of your lame $ eaten away by the rats of the failed Idiot Joe Briben Administration.)
  • El Kevarino If you have an EV platform that supports dual motor AWD, then why choose FWD for the 2WD version?
  • Analoggrotto Try as they may and as they might but the future of Electric, the future of human reality is TESLA. Only the highest level of affluence, priviledge and wealth can earn one a place in the stars. In fact when you look at the night's sky do you notice that the stars are brighter? This is because of Supreme Wizard Elon Musk, who has brightened them with this awesome grace.
  • Dukeisduke Sixty-five miles of range added in ten minutes? Doesn't sound very impressive.Also, how are they going to build these in volume if GM is building Ultium packs by hand (which they have been, slowly)? Or are the packs coming from Korea?
  • Dave M. On one hand Honda tends to make a strong, competitive product that should give you years of excellent service. On the other hand it's built on the bones of a GM product, who has a tendency to underbake their products until right before cancellation. NUMMI worked out well for GM; I wonder if this will work out well for Honda....