Russia will extend car purchase incentive plan

Russia will earmark 10 billion rubles (€150 million) in 2015 to extend an incentives plan for new vehicle purchases, Industry and Trade Minister Denis Manturov said, as Moscow tries to help the country’s struggling car industry.

Western sanctions imposed over the crisis in Ukraine and low oil prices have hit Russia’s economy. The falling oil price has also weakened the ruble, driving up inflation and forcing Russians to delay large purchases.

“The decision was made to allocate 10 billion rubles next year to support demand,” Manturov told journalists, adding an extra 2.9 billion rubles were also earmarked for the program this year.

Manturov said in August the government would earmark 10 billion rubles to fund incentives for vehicle purchases this year.

Under the existing scheme, buyers of new passenger cars are eligible for a discount of at least 40,000 rubles when scrapping or trading in their old vehicles, while the discount for commercial vehicles starts at 350,000 rubles.

Car sales fell 10 percent in October, after a 20 percent drop in the previous month, and are down 13 percent in the first 10 months, according to data published by the Moscow-based Association of European Businesses (AEB) last month.

The AEB has said it expects full-year vehicle sales to be down 12 percent to 2.45 million units.