MOSCOW (Reuters) -- The Russian government will earmark 10 billion rubles (207 million euros) to fund incentives for new vehicle purchases this year, the industry minister said on Thursday, offering long-awaited relief for the crisis-hit auto market.
The scheme, which will begin on Monday and run through to the end of the year, is expected to subsidize the sale of more than 170,000 passenger and light commercial vehicles, buses and trucks, Industry Minister Denis Manturov told reporters. Under the scheme, buyers of new passenger cars will be eligible for a discount of at least 40,000 rubles (825 euros) when scrapping their old vehicles, while the discount for commercial vehicles will start at 350,000 rubles.
Russia's last state-backed scrappage program in 2010 offered consumers cash incentives for trading in vehicles that were more than 10 years old.
Car sales have tumbled in Russia this year as economic growth has slowed, causing people to put off large purchases. Consumer sentiment has come under further pressure because of Western sanctions over the crisis in Ukraine. Car sales in Russia fell 23 percent to 180,767 year-on-year in July. Seven-month sales were down 10 percent to 1.4 million, according to the Association of European Businesses (AEB) lobby group.
The AEB slashed its forecast for Russian car sales and said it expected a 12 percent drop this year to 2.45 million vehicles, having previously forecast a decline of just 1.6 percent.
Automotive News Europe contributed to this report