State Will Subsidize Auto Loans

The government has drafted legislation that would aid banks making consumer loans for purchases of Russian-made cars, Deputy Prime Minister Igor Sechin said at a Cabinet meeting Monday.

The legislation mandates subsidizing two-thirds of the refinancing rate charged by the Central Bank this year, Sechin said, according to the transcript published on the government's web site.

The measure was to be presented Monday for signing by Prime Minister Vladimir Putin. Sechin did not specify whether support would also be extended for purchases of foreign-brand vehicles manufactured in Russia.

Ford Motor, Toyota Motor and Renault are among the foreign producers with plants in the country.

Putin also ordered that the Cabinet implement a plan by which the federal authorities would purchase automobiles from domestic producers using as much as 12.5 billion rubles ($349 million) from the federal budget to shore up the troubled industry.

Car sales in Russia, Europe's second-biggest market, may drop 19 percent this year amid falling disposable incomes and the credit crisis, the Association of European Businesses said last month. Seventy percent of customers applying to banks for car loans are rejected, Martin Jahn, head of Volkswagen's Russian unit, said in December.

(Bloomberg, MT)