Experiment in encouraging purchase of new Russian-made cars

28.01.2010

Legal Update No. 116

Goltsblat BLP advises that resolution of the Government of the Russian Federation of 31 December 2009 No. 1194 “On an Experiment to Encourage Purchase of New Vehicles to Replace Obsolete, Scrapped Vehicles and to Create in the Russian Federation a System for Collecting and Disposing of Obsolete Vehicles“ (the Resolution) came into effect on 1 January 2010.

According to the Resolution:

  • the experiment is to run from 1 January through 31 December 2010;
  • 10 billion roubles of federal budget funds are allocated to cover revenues lost by trade organisations from selling new Russian-made cars at a discount;
  • the discount is 50 thousand roubles;
  • the purchaser has to be an individual who has owned, for a minimum of one year, an at least 10-year-old vehicle qualifying as obsolete, with a total maximum weight of 3.5 tonnes, and has handed it in at a designated disposal point;
  • vehicles may be turned over for scrap from 8 March to 1 November 2010;
  • the new vehicle sold must: be previously unregistered in Russia; have a gross weight of no more than 3.5 tonnes; be sold at a price no higher than the manufacturer’s recommended retail price in effect at the time of sale; be one of the models and be produced by one of the manufacturers on the approved list.

The criteria for inclusion of models and manufacturers of new vehicles on the given list may be any of the following, when the model of the new vehicle is manufactured:

  • by a complete cycle within the scope of an industrial assembly agreement concluded with the Ministry for Economic Development of Russia;
  • by the large-unit assembly method, with transfer to full cycle manufacture under an agreement on industrial assembly concluded with the Ministry for Economic Development of Russia;
  • by a Russian legal entity on the condition that the manufacturer actually carries out welding, painting and assembly of the bodies and (or) salons of the vehicles or, in the event of manufacture using foreign-made components, has a programme agreed with the Ministry of Trade and Industry of Russia for use and localisation of such motor parts.

Subsidies are granted to Russian trading organisations selling new vehicles on the basis of agreements with the manufacturers indicated on the approved list or with legal entities authorised thereby and furnishing reports on sales, certificates of disposal and other documents. 

For additional information, please contact:

Nikolay Voznesenskiy
Senior Associate,
Corporate practice/ M&A/
Anti-trust legislation,Goltsblat BLP,
E:info@gblplaw.com

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