AVTOVAZ Instead Of Imported Cars
Custom initiative means rising taxes on foreign vehicles by minimum 10%
MOSCOW. 3 December. VOSTOK-MEDIA. The Russian government approved the bill that will raise taxes on imported vehicles by 10%. Russians have already reacted in protesting acts.
Rising taxes will make an impact on Russian customers that are used to relatively inexpensive imported vehicles and may cause social tensions in the Russian Far East.
Governmental regulation will raise the custom tax on imported vehicles by 10%. New car rate will be 25-30%. Besides, rate on euro which is calculated on the engine capacity will be extra 20%. Three and five year old cars will cost by 35% with the same euro rate. Taxes on 5 year old cars change as well. There will be 2.5-5.7 euro per every c. sm.
Experts expect the market to shrink after taxes imposed. New regulation influences mainly customers who chose quality for reasonable price.
The only winner in the situation is the Russian automobile company AVTOVAZ. Recent years witnessed decreasing part of AVTOVAZ at the market. Since 2005 this part has decreased by 14%. The head officials of AVTOVAZ do not hide the fact that they have taken much effort to lobby this regulation. They say imported cars win in competition with the Russian vehicles “Lada”.
Polls have shown that people already possessing foreign cars will never change it for the Russian ones. They would prefer saving up and buying a new foreign vehicle instead of purchasing a “Lada”. This is the situation in Moscow not saying about the FE where competition is already won by foreign vehicles.
Chairman of the Auto Association Viktor Pohmelkin says that governmental decisions must be taken in favour of Russian customers rather than Russian producer. Rising taxes on imported cars will motivate producer to raise taxes on Russian vehicles as it happened when taxes on 7 year old imported cars were raised up. Meanwhile, AVTOVAZ has already announced raised taxes on a new “Lada” collection in January, 2009.