Russia to Assist Ailing Domestic Car Makers

Russian Prime Minister Vladimir Putin is offering government assistance to car buyers in an effort to support the country's ailing auto producers. The move comes amid an economic slowdown that is also affecting American car companies in Russia.

Speaking at the Kamaz truck factory in the city of Naberezhniye Chelny, Prime Minister Putin said he considers it inadmissible for Russians to spend money on imported cars when Russian domestic manufacturers are cutting back production. Mr. Putin added that state companies should buy only cars made in Russia, and he recommends that private firms do so as well.

On Sunday, about 3,000 people staged a protest in the Far Eastern port city of Vladivostok against a recent government decision to raise tariffs on imported used cars. Protest organizers say about 200,000 people in the Vladivostok area are involved in the import, sale and servicing of used foreign vehicles. But Mr. Putin says the government will compensate the cost of shipping Russian-built models to the Far East.

Mr. Putin is proposing to end rail tariffs for the shipment of cars built anywhere in Russia to the Far East. He says rail company tariff losses will be compensated from the state budget.

Shipping cars from Russia's major car manufacturing center around Saint Petersburg to Vladivostok would involve a rail trip of nearly 7,000 kilometers.

In addition, Oleg Dackiw, commercial director of the Russian auto industry Internet publication, Autodealer.ru , told VOA that people in the Russian Far East are accustomed to Japanese imports.

Dackiw says a driver with a used Toyota in Vladivostok will never give it up for a car built by Russia's AvtoVaz, because even if it's new, it doesn't give the sense of comfort, security and safety of those right-wheel drive cars from Japan.

Prime Minister Putin says the most important task is to revive consumer activity. He proposed subsidizing interest rates for three-year consumer automobile loans. He noted that Russians who want a car would do best if they bought one in 2009, when the assistance will be available.

That assistance will be available for cars built in Russia by foreign manufacturers, who are also cutting back production. They include American carmaker Ford, which will stop operations near Saint Petersburg for nearly one month, beginning December 24. General Motors, which opened another plant in Russia last month, will produce cars only three days a week beginning in February. The new GM facility in Russia employs 1,700 people and represents a $300 million investment.

Rising unemployment and the global credit crunch have lowered demand for cars in Russia. Mr. Putin says his government's proposed credit subsidies would apply to cars costing no more than 350,000 rubles, about $12,500.