Russia auto market would fall 30-40 percent in 2016 if no state support: Putin

Vehicles, including Lada cars produced by the Russian automobile maker Avtovaz, are parked on the premises of the 'AvtoGermes' dealership in Moscow, Russia, in this March 14, 2016 file picture. REUTERS/Maxim Shemetov/Files

MOSCOW (Reuters) - Russia’s automotive market would shrink by 30 to 40 percent this year if it were not receiving state support, Russian news agencies quoted President Vladimir Putin as saying on Saturday.

Russian auto sales have been falling for a fourth consecutive year amid a weakening domestic economy, a depreciating rouble currency and lower oil prices.

The Association of European Businesses (AEB) lobby group sees Russia’s sales of new cars and light commercial vehicles falling 10.3 percent to 1.44 million units in 2016.

“We have managed not only to save the car production segment but sales of trucks and buses (also) rose slightly,” Interfax news agency quoted Putin as saying.

Support for the auto sector will continue in 2017, Putin told a meeting with plant workers in Yaroslavl, central Russia. He added that such support would be worth 65 billion rubles ($990 million) in 2016.

According to government data, Russia will spend 50 billion rubles on auto-sector support this year, but some officials include funds left from 2015 in this year’s total figure.

Russia’s Industry Ministry recently proposed the government raise auto support to 64.1 billion rubles in 2017 from 50 billion in 2016, a copy of the proposal seen by Reuters showed.

However, the ministry has also proposed cancelling a “cash for clunkers” program, which gives buyers a state-financed discount on new-car purchases in exchange for scrapping their old vehicles.

Russia’s October car market fell by a moderate 2.6 percent due to a low base effect in the same month a year ago, while the AEB has said any trend stabilization in 2017 would be short-lived without meaningful government support.

Reporting by Polina Devitt and Gleb Stolyarov; Editing by Dale Hudson