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Friday, 11.03.2011
Scrapping scheme: 470000 old cars were exchanged
Moscow. Within one year 468260 owners of cars older than 10 years were able to buy new cars with the help of a state grant of 50000 rubles (1250 euros) in exchange for their old one. The program will end soon.
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On the 8th March last year a scrapping scheme was launched, similar to the German program, to revitalize the Russian car market that had been severely affected by the crisis. 468260-cash certificates for the scrapping of old cars have since been issued, said the Ministry of Industry and Commerce.
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This incentive scheme will end soon - it has been extended twice and is now limited to 500000 payments. It has fulfilled its purpose in any case – less because of the environmental aspect, but more in the interest of the Russian car industry in general and particularly the domestic low-cost brand Lada .
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After all, unlike in Germany, the scrapping scheme applied only when purchasing a new car that was built in Russia. As owners of more than ten year old cars do not necessarily belong to the most affluent clientele, the scheme mainly benefited the producers of cheapest cars in the Russian market.
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Half of the scrapping money went to Lada
By the end of the year 400000 scrapping certificates were issued – 200000 went to Lada dealers and were converted into cash benefits. Renault had 3000 old car owners buying its budget models, Logan and Sandero. Approximately 24000 chose Skoda, Ford and Chevrolet.
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The scrapping scheme indeed created demand in the car market that had dramatically collapsed during the economic crisis in 2009 and grew by 30 percent in 2010 to 1.78 million cars.
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Classic car ‘Zhiguli’ became market leader
Market leader Avtovaz, rescued during the crisis from bankrupcy through governmental subsidies, was able to increase its sales of Lada models by as much as 47 percent.
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In 2010 the best-selling car model in Russia, as a result of the scrapping scheme, was again the totally antiquated, but extremely cheap Zhiguli (Lada 2105 and 2107), of which 138000 units were sold. This car is currently available in Russia for ˆ 4,500.
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Car buyers demand increases for luxury cars
Today the Russian car market seems to thrive again without public subsidies: Experts have long recognised a direct link between the price of oil and the new car sales figures in Russia. Demand moves away again from cheaper cars to larger, more modern and comfortable models.
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Avtovaz has also drawn its conclusions: The production of the spartan 2105, the best-selling model produced in Togliatti on the Volga, has already been stopped and the plant for the 2107,will be moved to the car factory Isch in Izhevsk later on this year.
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