Moscow orders state officials to revert to cars made in Russia

Tue Jul 15, 2014 11:50am EDT

* Putin aims to boost domestic industry amid sanctions

* Some foreign cars assembled in Russia

* Many state officials like upmarket foreign models

By Vladimir Soldatkin

MOSCOW, July 15 (Reuters) - Top Russian officials may soon forfeit the sleek black Mercedes limousines that speed them through the Kremlin gates in favour of home-produced cars as part of a push to protect domestic industry threatened by Western sanctions over Ukraine.

Prime Minister Dmitry Medvedev said he had signed an order limiting purchase of imported cars for state and municipal officials - a move in line with Vladimir Putin's bid to increase self-reliance from engineering to defence, but carrying more symbolic than commercial importance.

Many Western cars are now assembled in Russia, but not the Mercedes limousine, the car of choice for many government officials and often used by President Putin.

In Soviet times, homemade limousines such as the ZiL and for lesser officials, the Volga were de rigeur. These have now largely vanished from the streets, to the chagrin of some who see profligacy and a lack of patriotism in the preference.

To address the concerns, domestic producers Sollers , Kamaz and GAZ have been asked to design a car for government officials by the end of the year under a project known as "Cortege".

"We have drafted a resolution that bans the state and municipal purchase of certain types of foreign-made equipment and vehicles, notably such conspicuous issues as the purchase of vehicles for officials," the government's website quoted Medvedev as telling deputy ministers at a meeting on Monday.

"I hope this will help maintain the necessary balance on the market and ultimately satisfy the demand for these services."

Auto experts said the decision was largely symbolic as many foreign producers, such as Volkswagen, BMW, Renault, Nissan, General Motors, Hyundai, and Peugeot-Citroen, Toyota and Mitsubishi, are already assembling their cars in Russia.

"This will not influence the market at all, it is a political decision," said Vladimir Bespalov, an analyst with Moscow-based VTB Capital, putting the share of state-funded car purchases at less that 3 percent of the market.

Putin has urged domestic companies, including arms manufacturers, to increasingly use local products and cut out the use of foreign components that could be hit by U.S. and EU sanctions over a pro-Russian rebellion in eastern Ukraine.

He has tried to promote Russian cars before, for instance by driving a yellow Lada Kalina Sport over the Chinese border in 2010.

($1 = 34.3720 Russian Roubles) (Reporting by Vladimir Soldatkin; additional reporting by Gleb Stolyarov; editing by Ralph Boulton)

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