The Russian government raised customs duties on foreign cars, which basically raised their price
The car import to Russia has increased 2.7 times in the first half of the current year. A report from the Russian Federal Customs Service says the import of foreign cars has increased up to 215.2 thousand cars.
In January-June of 2004 the import of foreign cars made up 2 billion 182,9 million dollars. The car import from CIS states made up 14,7 thousand cars in the sum of $75.1 million. The import from other foreign states reached 200,5 thousand cars totaling 2 billion 108 million dollars (2.2 times as much).
In addition, over 16,000 trucks were imported to Russia over the above-mentioned period (+8.7 percent vs. 2003) in the sum of $166.6 million (+25.2 percent). The import of trucks from foreign states gained 10.5 percent and made up 15.7 thousand vehicles.
On July 15th spokespeople for the Russian automotive industry stated customs duties to deliver foreign cars to Russia should be raised to let the home industry develop. They believe customs duties on used cars imported to Russia are the lowest among all.
The selling of a foreign-made car in Russia brings more profit that the selling of the same car made in Russia. The difference is quite large. This is one of the main reasons to explain large imports of foreign cars to Russia. Therefore, the home car industry suffers from the lack of investments.
Russian car industry businessmen believe creating appropriate conditions for attracting investments to Russia is a way to pull the industry out of the crisis. Other countries' experience comes in handy at this point: they revise the customs policy to incite their national industries to develop. High duties on foreign-made cars made the car production more profitable.
Minister for Economic Development and Trade German Gref promised on May 27th not to raise duties on foreign cars, despite the initial intention to raise tariffs on import cars in 2004 by ten percent.
Several years ago the Russian government raised customs duties on foreign cars, which basically raised their price. The considerable increase of the demand on home-made cars did not follow the decision, although Russian cars became more expensive too. The present duty on the import of foreign cars makes up 25 percent.