Putin calls for car-makers to step up a gear

Prime Minister Vladimir Putin has called for far more cars sold in Russia to be produced domestically. During a visit to the Yelabuga special economic zone in Tatarstan, Putin urged car manufacturers to make more components in Russia and promised to reduc

Putin's visit marked the roll-out of the first Fiat Ducato assembled at the Yelabuga plant. The first car appeared two years after Fiat and Severstal Auto set up their joint venture and chose Yelabuga as the launch-pad for production.

The Ducato is just one of many foreign cars now assembled in Russia. In two years the country has created a favourable environment for foreign car producers to build assembly plants in the country. They are the main beneficiaries of special economic zones like Yelabuga and enjoy reduced import duties on components.

Putin said these measures were essential to support the Russian automotive industry.

“We've got to admit that Russia's automobile industry has seriously lost ground lately. It’s been unable to meet growing demand either in terms of quantity or in quality of production,” he said.

Putin also noted that the country is now counting on wide-ranging international cooperation, including attracting strategic investors from abroad, as well as opening assembly factories in Russia for the world’s automobile leaders.

The Prime Minister urged car makers to localise production and build as many components in Russia as possible, while Russia’s Industry Minister, Viktor Khristenko, outlined the structure of the automotive sector in the country by 2012.

“By 2012 the market for automobiles will be no less than four million cars and we want at least 70% of them to be produced in Russia. We also want the number of components produced in the country to be at least 60%,” he said.

To fulfill the ambitious plans, the government has promised to reduce import duties on the special types of steel used in production. Component manufacturers will also enjoy the privileges of special economic zones.

For the time being though, Russian car manufacturers’ share of the domestic car market continues to shrink in the face of stiff competition from foreign producers.