AvtoVAZ trumpets a scrapyard – Newspaper Kommersant No. 3 (7448) dated 01/11/2023

Despite the sharp decline in deliveries of foreign cars to Russia, AvtoVAZ proposes to increase the size of the scrap fee in order to further protect the domestic market from imports. Kommersant’s sources emphasize that the government has repeatedly rejected this idea, and now it will limit the few existing local projects based on Chinese cars, since they will not receive compensation. All this creates the risk of further price increases and car shortages.

The head of AvtoVAZ, Maxim Sokolov, announced the need to increase the size of the scrap fee for cars in order to maintain the level of the import barrier: “Today, the scrap fee is 170 thousand rubles. If earlier in relation to the price of the car it was such a stopping factor – about 10-15% in some models, now it is much lower than 10% in many models.

The disposal fee acts as a barrier against imports, but it is paid for all cars – both imported and produced in the Russian Federation. The base tax rate for cars is 20,000 rubles. It is multiplied by a factor depending on the engine size. The amount of 170 thousand rubles, which was named by Mr. Sokolov (more precisely – 178.4 thousand rubles) is a fee for cars with an engine of 1-2 thousand cubic meters. cm.

The last time the utility fee was raised was in 2020. On average, in the passenger car segment, then the coefficients increased by 110.7%, which led to an increase in prices not only for imported cars, but also for cars manufactured in the Russian Federation. Automakers that have entered into special investment contracts (SPICs) can claim compensation for salvage fees. From 2022, reimbursement depends entirely on the level of localization (see “Kommersant” dated December 16, 2019).

In the Ministry of Industry and Trade, when asked by Kommersant about the possibility of increasing the scrap fee, they said that they were closely monitoring market changes, including the dynamics of imports: “Depending on the change in the situation, appropriate decisions will be made.” Sources of Kommersant in the automotive industry note that the government has repeatedly discussed the growth of salvage fees, including as early as 2023, but so far the answer has been negative.

Automotive expert Vladimir Bespalov believes that now a balance is needed between market saturation, which would lead to lower prices, and localization. One of Kommersant’s interlocutors in the market adds that AvtoVAZ should be interested in increasing the production of Russian cars in order to increase the load on component suppliers, which would facilitate localization.

However, increasing the collection does not solve this problem, but leads to higher prices and the fact that the market will continue to be in short supply, Mr. Bespalov notes.

After the crisis began, only AvtoVAZ and China’s Haval continued to produce in the Russian Federation among the major manufacturers of passenger cars. Part of the factories managed to reorient to the production of cars based on Chinese models. Among other things, Moskvich did this by launching the JAC line under its own brand at the former Renault plant.

But Maxim Sokolov emphasizes that such an approach only “creates the illusion that our industry has quickly recovered.” AvtoVAZ is going to invest at least 60 billion rubles by 2026. into new products, “and then Chinese brands, incomprehensible to us, come to an agreement at empty capacities to assemble low-localized cars, for which it is still planned to sometimes give state support in the low price segment up to 2 million rubles, and they begin to eat up the market of our product, where we We are investing a lot of money.”

Meanwhile, AvtoVAZ itself uses a similar strategy.

According to the top manager, interest in the former Nissan plant (NAMI will transfer it to AvtoVAZ) is due to the fact that “our competitors do not get these capacities” for low-localized assembly.

On the basis of the site, the concern plans to produce cars under the Lada brand in more expensive segments than the currently presented line, while also intending to attract a Chinese partner, and to produce SKD by 2024.

When asked by Kommersant how these plans differ from the Moskvich project or the release of LCV under the Sollers brand in Yelabuga, Maxim Sokolov said that these players only “announce”: “We have a product, AvtoVAZ as a base and production, which can be fully unified with our base.” He said AvtoVAZ “will regulate” production at the Nissan plant, limiting it to 10,000 cars in 2023. Sources of Kommersant in the market say that without compensation for salvage fees, such projects, including AvtoVAZ itself, will not be able to raise funds for further localization.

Olga Nikitina