PARIS (Reuters) -- Lada-maker AvtoVAZ is expecting total Russian car sales to rise to 1.7 million in 2010, up from a previous forecast of 1.6 million, due to the government-sponsored scrappage scheme.
CEO Igor Komarov said the incentives program -- which awards 50,000 rubles ($1,584) to car owners willing to trade in 10-year-old locally produced vehicles for new models -- had invigorated the market after a dismal 2009.
"In the current economic climate the scrappage scheme has given consumers the confidence to spend money," he told Reuters on the fringes of a Russia-France event in Paris.
Komarov's new forecast came just six weeks after he predicted 1.6 million cars would be sold this year, although both figures are still some way below the near 3 million sold in the boom year of 2008.
Russia had been predicted to overtake Germany as Europe's biggest car market before the sharp economic slowdown and freezing of loan markets halved the country's sales in 2009.
AvtoVAZ, 25 percent owned by Renault, has been the chief beneficiary of the cash for clunkers scheme. Its sales in May rose 60 percent year on year as it continues to recover from its near bankruptcy in 2009.
Rival Sollers, which has a partnership with Italy's Fiat, is also responding to signs of life in the car market by agreeing to build a $250 million new plant in Kazakhstan.