Car industry development concept: who is to benefit?

The story connected with duty increase for old foreign cars seems to be drawing to its conclusion; yesterday Russian Prime Minister Mikhail Kasyanov signed a concept for the domestic car industry development. However, this does not mean at all that the concept will immediately come into effect; it now requires approval of the government. The government is very likely to do it.

Disputes about increase of duties for foreign cars older than seven years lasted for several months. Russian Minister for Industry, Science and Technologies Ilya Klebanov made considerable contributions to discussion of the subject. As a result of his efforts, 100% duties for second-hand foreign cars were nearly introduced. Activists of this rather unpopular measure explained the idea simply: the high duty will protect Russian car makers from competition with foreign rivals. To tell the truth, the statement lacked logic. Authors of the initiative did not explain, what exactly Russia-made cars needed protection from competition with foreign cars produced 7-10 years ago.

The prime minister seems to be understanding this fact perfectly well (or probably lobbyists of western car makers helped him to reach the understanding). In any case, Mikhail Kasyanov already said that problems of Russian car industry would not be settled at the consumers’ expense. Thus, the concept for the car industry development was sent for revision. The variant of the concept approved by the prime minister provides that duties for old foreign cars will be established at the rate of 25% irrespective of the car production date. Customs duties can be reduced for several vehicles that are not produced in Russia. Likewise, customs duties can be reduced for equipment designed for the automobile industry if this is not produced in Russia. However, the concept contains one important item: with a view of “creating unfavorable conditions for maintenance” of old cars, the concept provides for introduction of higher insurance fees for domestic and foreign cars with the operation period of over seven years. In this case the rate can increase several times. The government resorts to the measure to stimulate interest of consumers to buy new cars. Main objective of the concept is to integrate the Russian car industry into the world automobile market, to support production of modern cars that meet world ecological and safety requirements, create new facilities for car production and develop competition. At that, creation of new facilities presupposes attraction of more foreign investors. So, the objective are good; it would be really very nice to realize them. What is clear now is that foreign cars will go up, not by 100%, but still. Vasily Bubnov PRAVDA.Ru

Translated by Maria Gousseva

Read the original in Russian: http://www.pravda.ru/main/2002/07/18/44361.html

Related links: