Russian auto industry will lose subsidies

The Russian government decided to differentiate the payment of industrial subsidies to automakers depending on the level of localization. Experts already predict high price increases

As Kommersant found out, the government nevertheless made a controversial decision to differentiate the payment of industrial subsidies to car manufacturers – de facto compensation for waste collection – depending on the level of localization. Although foreign concerns signed special investment contracts mainly for industrial subsidies, starting from 2020 half of the subsidies will depend on the number of points for localization in accordance with Decree 719, and by 2022 the “guaranteed share” of subsidies will be reduced to zero.

More specifically, from 2021, 75% of the compensation will be paid according to actual localization, from 2022 – 100%. The localization level will be calculated on the basis of the point system prescribed in the 719th government decree, for maximum compensation you need to score 4 thousand points. At the moment, the maximum points that it makes sense to score for automakers (to access the public procurement program since 2025), was estimated at 5.5-5.8 thousand points. Welding and painting (the minimum conditions on which SPIC was in the passenger segment) give automakers only 900 points.