The Russian government has reportedly made an increase in the export of locally made cars, auto parts and engines a priority for its economic strategy. According to a report by Wards Auto, global automakers operating in Russia will have the opportunity to significantly increase exports of locally made vehicles and engines going forward, as the industry is granted special customs benefits and subsidies by the national government. Such benefits include the lifting of value-added taxes and duties on imports of auto parts used in the production of vehicles destined for export.
The report states that recent devaluation of the Russian ruble has significantly reduced costs for global automakers, who are placing greater emphasis on exporting Russian-made cars in response to a major decline in local demand. In 2017, the Russian Ministry of Industry and Trade reported auto exports of 84,400 units for the year, an increase of 24.1% compared with 2016. This brings the value of the country’s global car exports to $1.32 billion.
Now, the government is said to be aiming to double the number of cars exported from Russia by 2019. Volkswagen Group (VW) is said to be among the global automakers which will take advantage of the benefits and subsidies offered by the government – its plant in Kaluga, Kaluga Oblast, Russia, is said to be one of the country’s largest in terms of its annual output.
In 2017, VW was said to have produced 167,500 vehicles in Russia, of which 118,500 were manufactured at Kaluga and 49,000 at its Nizhny Novgorod plant in Volga Federal District. The automaker reported that it exported 25,100 units, 70% more than a year earlier.
Wards Auto stated that the automaker now has plans to increase exports of cars and engines produced at Kaluga in the coming months, with about 40,000 engines built at Kaluga set to be exported to VW production sites throughout the world, primarily within the European Union. In addition to its engines, VW plans to export up to 10,000 Skoda Octavia cars produced at Nizhny Novgorod.
Negotiations between the Russian government and other global auto producers are said to be underway. In addition to customs benefits, the Russian government is said to be planning to stimulate exports by changing the existing distribution of export subsidies among both domestic and global automakers. The budget for subsidies both this year and in 2019 is RR11.8 billion rubles ($180 million).