Russia to hike tariffs on cars

RUSSIA will increase import duties on foreign cars to encourage investment in local manufacturing plants and boost domestic players, Prime Minister Vladimir Putin told the news channel Vesti 24.

Speaking from behind the wheel of a locally produced yellow Lada Kalina Sport, Russia's leader said he wanted technologically advanced overseas producers to work alongside Russian groups like Lada-maker AvtoVAZ.

"Here's a timeline: In some years we will gradually begin to raise the customs tariffs ... But we do not want to undermine your (foreign carmakers') business in Russia - come to us and deploy production here," he said while driving a leg of a 2,000 km (1,243 miles) journey to Chita near the Chinese border.

Russia has increased import duties on new vehicles to 25 from 20 per cent since early 2009 as it seeks to support local players, many of whom were forced to the brink of collapse by last year's financial and economic crisis.

Industry leader AvtoVAZ had to be bailed out by the state to avoid bankruptcy last year, but has since lead a market recovery alongside French 25 per cent shareholder Renault. Germany's Daimler and Italy's Fiat have also entered the Russian market as partners to Kamaz and Sollers, respectively, while a string of others have opened or expanded manufacturing plants.

"We want you to gradually transfer technology skills, increase productivity ... and the level of technical training for our specialists," Putin said, addressing foreign players. "And for our part we will do out best to ensure a successful launch of your business." Russia has adopted a series of initiatives to boost local car and truck sales since the crisis.

Putin told his Vesti 24 interviewer he was happy with the Lada Kalina, adding that he now thought the state had done enough to ensure Russia produces high quality cars. However Russia's Kommersant newspaper said the vehicle had to be replaced at one point during the journey after stones got into the gap between the wheel and the tyre.

Overall Russia car sales rose by 45 per cent in July following a near halving of the market in 2009.

Reuters