Automakers seek another year of payment deferment

Automakers can receive a deferment for the second year in a row in paying the recycling fee, which makes up a significant share of their expenses. The Ministry of Industry and Trade has already prepared a corresponding project, which has been discussed with the industry since the beginning of autumn. Automakers, justifying the need for a deferment, cite a lack of working capital due to high loan rates. Kommersant’s sources explain that the funds are also used to advance the supply of components, since otherwise their manufacturers cannot start up.

The Ministry of Industry and Trade wants to postpone the payment of recycling fees by automakers for the second year in a row. The ministry has already prepared a proposal to postpone payment deadlines for the fourth quarter of 2023 and the first-third quarters of 2024 to December 2024, they report. The project is aimed at interdepartmental approval and has already been supported by the Ministry of Economy, the Ministry of Industry and Trade added.

Kommersant sent a request to the Ministry of Finance. The disposal fee paid for production in the Russian Federation was estimated in the draft budget at 251.4 billion rubles. in 2023, for 2024 – 411.9 billion rubles.

According to Kommersant, this proposal has been formed by the ministry together with automakers since the beginning of autumn. Representatives of a number of concerns – AvtoVAZ, KamAZ and Moskvich – spoke publicly about the need for such a measure on November 20 at parliamentary hearings in the Federation Council. The head of AvtoVAZ, Maxim Sokolov, explained the need for a postponement by saying that the company “is in dire need of working capital, especially given the high key rate.”

“For the entire auto industry, especially with such a high key – and, as a consequence, credit – interest rate, this will be of great importance. This measure was in place in 2020 and last year, so there is nothing extraordinary about this measure. But it will help reduce the negative effect of sanctions,” said Mr. Sokolov.

The GAZ representative also considers the measure logical. Sollers told Kommersant that they support the introduction of a deferment in light of the current rate increase to reduce the burden on working capital.

During the event, Deputy Head of the Ministry of Industry and Trade Albert Karimov called the postponement an effective support measure. The Ministry of Industry and Trade says that it will extend to companies producing cars under special investment contracts (SPIC). SPIC provides benefits in exchange for investments, as well as access to recycling fee compensation depending on the level of localization.

Recycling takes up a significant share of automakers’ costs. But traditionally, domestic players who can qualify for a deferred payment receive a full refund of the fee on the “classic” model range, but lose on new, not fully localized models.

Automobile concerns will not be able to receive double funds at their disposal for the entire year, that is, at the same time they will not pay the recycling fee and receive compensation for it.

According to data on budget expenditures as of November 17, out of the total volume of subsidies of 194 billion rubles. About 33 billion rubles remained unpaid. Formally, the deferment on payment of the recycling fee is valid until December 15 for the fourth quarter of 2022 and the first-third quarters of 2023. In 2023, one of Kommersant’s sources says, at the beginning of the year the companies received a “small advance”, which was covered from past payments, and then the budget expected the actual payment of the disposal fee to pay compensation. However, Maxim Sokolov said that AvtoVAZ is only going to pay 60 billion rubles. disposal fee for this period. Another Kommersant interlocutor says that compensation payments were indeed not made after the advance payment at the beginning of the year, but resumed in September, that is, before the actual payment, but this may be due to an increase in recycling collection from August 1.

Another Kommersant source explains that the deferment of the disposal fee allows companies to use funds, among other things, for the purchase of components, since “some suppliers have to pay advances in order for production to start,” and trade with China. A year earlier, the government said that the delay should help create a supply of components for the smooth operation of production lines.

Sergey Udalov from Avtostat adds that the production preparation cycle has increased significantly in terms of time since 2022. Supply chains have lengthened, and in order to receive components on time, it is necessary to advance supplies in advance, he notes. Therefore, he also sees the need to reduce the burden on the industry.

Olga Nikitina