The Ministry of Industry and Trade wants to change the system for assessing the level of localization of cars

The Ministry of Industry and Trade of the Russian Federation is preparing amendments to Decree No. 719, which regulates the procedure for localizing industrial products manufactured in Russia. This was told to Vedomosti by two sources familiar with the activities of the ministry, and confirmed by a representative of the Ministry of Industry and Trade. These changes involve the redistribution of points within the system for assessing the localization of vehicles from welding, painting and stamping of car body parts in favor of auto components.

The localization score in the automotive industry was introduced in 2019. It is not only an indicator of the “Russianness” of cars produced in our country, but also allows companies that have signed a special investment contract (SPIC) to qualify for participation in public procurement of vehicles and programs to support demand for automotive equipment. In proportion to the number of points scored, the automaker also receives industrial subsidies, which the industry considers to be compensation for the recycling fee.

The maximum number of points that a car manufacturer can score from among those who signed the SPIC of the first version is 7,000. Almost all plants currently operating in Russia have such contracts. Within the framework of the current scale, welding of the body, its painting, stamping of body parts from Russian metal, including its cutting, are worth a maximum of 1500 points. For comparison: the updated Lada Vesta, which will go on sale in the near future, receives a total of 4,500 points.AvtoVAZ“.

The Ministry of Industry and Trade wants to reduce the number of points for welding and painting and give more points for the localization of components, says one of the interlocutors. The corresponding package of amendments to the scoring mechanism is being discussed by the Ministry of Industry and Trade together with the industry community, a representative of the department confirms. According to him, this is being done to create conditions that stimulate the rapid development of the production of critical components for the domestic automotive industry. But it is still too early to talk about a finally formed and approved position, he emphasizes.

At the same time, the department does not plan to abandon existing programs to support industry enterprises aimed at developing the production of auto components, says a representative of the Ministry of Industry and Trade. Among them are a program to subsidize reengineering costs, the Autocomponents program and a cluster investment platform.

The upcoming changes are perceived negatively in the industry. The proposals of the Ministry of Industry and Trade take about 1,000 points from traditional technologies into new components, a source in one of the auto concerns operating in Russia explains. “This essentially changes the concept of determining the Russianness of a product. The Ministry of Industry and Trade is trying so hard to stimulate us to develop the component industry. But this will not make our cars more modern, they will simply lose these 1,000 points,” the interlocutor says. According to him, this will make it difficult to receive a full refund for the scrappage and eventually force manufacturers to raise the price of cars.

Since 2022, the payment of all 100% industrial subsidies to car factories is tied to a score assessment of the level of localization of their products. In particular, in order to fully compensate for the waste collection, the manufacturer of passenger cars had to score 2000 points last year, in 2023-2024. – 2567 points, in 2025-2026. – 3701, in 2027 – 4835, and in 2028 – 5400 points. For comparison: at the end of 2021, Vesta scored about 4,000 points, and the most localized foreign cars at that time, Renault Logan and Duster, about 2,200 points each, Hyundai Solaris and Creta – about 2000 points.

Potential changes would destroy the entire regulatory system and lead to the fact that no Russian manufacturer, regardless of the level of localization, will meet the required level of points for public procurement, says a source at another car factory. “This in no way stimulates an increase in localization, but only discriminates against Russian manufacturers who have invested billions in the achieved level of localization, which they want to reset. <...> The Ministry of Industry and Trade is trying to force automakers to independently create an auto component industry without understanding that this will not happen, ”he believes.

According to the current conditions of the Ministry of Industry and Trade, in order to participate in the public procurement program, a manufacturer of passenger cars and light commercial vehicles in 2023 needs to score at least 3200 points. Vedomosti sent questions to Russian national automakers.

This is a forced measure, with the help of which the Ministry of Industry and Trade is now trying to preserve at least those component productions that remained after the departure of foreign automakers, says Sergey Burgazliev, an independent consultant on the automotive industry. According to him, with the support of component production, one should first of all pay attention to the simplest parts made of polymers and rubber, as well as glass and noise insulation elements. “To aim at the localization of complex high-tech components in the current conditions is a utopia,” the expert added.

The executive director of Avtostat, Sergey Udalov, sees in the proposals of the Ministry of Industry and Trade an opportunity to develop domestic component production. They may also be needed by new Chinese partners who are not ready to immediately invest in welding and painting in Russia, he admits.