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Experts: Ban on car imports for government needs a right measure

July 15, 2014, 15:22 UTC+3 Alexandrova Lyudmila
Prime Minister Dmitry Medvedev

Prime Minister Dmitry Medvedev

© ITAR-TASS/Dmitry Astakhov

MOSCOW, July 15. /ITAR-TASS/. The ban on import of foreign-built cars for state and municipal needs finalized by Prime Minister Dmitry Medvedev on Monday is a timely and realizable measure, say experts. It is expected not only to support domestic manufacturers but also to stimulate foreign companies to start production in Russia.

Colossal federal spending on goods and services had better go to Russian companies rather than foreign producers, if, of course, they are able to compete in terms of quality and prices, Medvedev said. If not, the automobiles should be unconditionally rejected, even though produced in Russia, he added.

The ban will concern the costly imported cars for government officials as well as public transport, municipal, construction and emergency services’ special equipment. However, the decree will not automatically cease cooperation with foreign automobile companies since automobiles assembled in Russia are considered Russian in the document.

Localization level, the main condition for foreign automobile buys, is planned to increase year after year. The present 30-40% should rise to 60-70% by 2018, said Deputy Prime Minister Arkady Dvorkovich.

Almost all brand cars used for work by government officials already slide off the assembly line in Russia. Ford Mondeo and Nissan Teana are assembled near St. Petersburg; Skoda Superb and Audi A6 and A8 are built at VW Group Rus facilities in Kaluga, while BMW 5 and 7 series at Avtotor facility in Kaliningrad. It is only Mercedes, one of the most popular brand cars for officials, that is still imported. The German manufacturer is reported to be actively searching for production facilities in Russia. Meanwhile, Toyota noticeably lags behind the planned localization figures (10%).

The ban is a timely, useful and realizable measure, deputy director of the Centre for competition policy and state procurements development at the Russian Presidential Academy of National Economy and Public Administration, Nikolay Baranov, told Itar-Tass. “It certainly will not change the market situation overnight but will prompt foreign manufacturers, primarily those who produce special equipment, construction and road machinery, to start production on the Russian territory,” he said. “Besides, they will increase localization - it is a good step from the perspective of Russian producers.”

The expert admitted that some would try to circumvent the ban and find reasons to buy a foreign-built car but it is experts’ task to give a correct estimate of the customer’s reasoning. The expert analysis will help control customers, Baranov believes.

“This decree will have no noticeable effect on the sector as a whole. All the less so as the government is already buying large quantities of Russian cars from AvtoVAZ, UAZ and the others,” VTB Capital analyst Vladimir Bespalov told Gazeta.Ru. “But politically, it is the right decision: state automobile procurements are arranged like that in many other countries."

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