29 april 2011

Prime Minister Vladimir Putin meets with Deputy Prime Minister Sergei Ivanov, Deputy Prime Minister and Finance Minister Alexei Kudrin, Defence Minister Anatoly Serdyukov, and Deputy Minister of Industry and Trade Andrei Dementyev

The officials discussed the truck scrapping programme and the purchase of new trucks for the armed forces. Vladimir Putin said that such an exchange, which is similar to the car scrapping programme, is advantageous for both the producers and the Defence Ministry.

Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon! Colleagues, we have recently analysed the progress of the car scrapping programme. We have agreed to examine how this experience can be used in other segments of the automotive industry, such as the production of agricultural vehicles.

The armed forces are also experiencing problems: 50% of their vehicles have been used for between 12 and 20 years, and some 10% have been used for more than 20 years. In this respect, the replacement of old military vehicles with new ones is certainly a priority.

This issue is also very urgent in connection with our transition to new types of fuel. We must prepare the armed forces for this move and do so gradually, step by step. In this regard, I asked you to work things out with the industry, and I asked the Defence Ministry to analyse its options for organising this work. According to the data you provided, up to 6,000 new trucks will have to be purchased, and the same number of outdated trucks have to be given back to the producers: 4,000 old trucks will be given to Kamaz, and 4,000 new trucks will be ordered at this plant, and some 2,000 outdated vehicles will be exchanged at the Ural Automotive Plant for the same number of new ones. Have you coordinated this issue with the industry?

Andrei Dementyev: Yes, of course. We have discussed both the terms and procedure of  such exchanges and the scrapping of old vehicles with the producers. Automotive plants are ready to execute these orders and provide a discount on new vehicles equal to the value of the old ones. We are ready to agree on a list of new vehicles with the Defence Ministry. According to the preliminary forecasts, the automotive plants will be able to meet requirements for all the vehicles by the end of the year.  

Vladimir Putin: This should significantly bolster the automotive industry. For instance, last year the Defence Ministry ordered 5,000 units from Kamaz, while it planned to order no more than 500 units this year. But 500 vehicles plus 4,000 is almost equal to last year’s volumes.

Andrei Dementyev: Today, an order of 4,000 trucks is equivalent to 10% of KAMAZ’s yearly production output. This is a significant help indeed. And this is a big order, which, as you know, will allow Kamaz to maintain its investment plans and profitability level. It will encourage the modernisation of its production range and provide jobs and adequate wages for its workers.

Vladimir Putin: Well, it’s also big enough for the Ural Automotive Plant.

Andrei Dementyev: By percentage, the figure is even higher for the Ural Automotive Plant.

Vladimir Putin: Is the Defence Ministry ready for this work?

Anatoly Serdyukov: Yes, and we know which vehicles we would like to purchase. These include front-line vehicles and transport vehicles, armored vehicles, and special vehicles. We have fully worked out the list of vehicles we would like to purchase from Kamaz and the Ural Automotive Plant.

Vladimir Putin: Does the Military-Industrial Commission have any objections?

Sergei Ivanov: No. We have funds in the state defence order designated for the purchase of the following vehicles: lorries, Kamaz trucks, and Ural trucks. Mr Serdyukov was right in saying that the production range is very broad indeed, including armored vehicles and special vehicles that are more expensive to produce that the ordinary Kamaz trucks. I spoke with Oleg Deripaska, and he is ready to supply 2,000 Ural trucks under these terms. This is a large order, indeed. I made inquiries and learned that the Ural plant produces one thousand vehicles a month. Hence, our order means a two-month workload for the plant. It has been mentioned that this order is larger for the Ural plant than that of Kamaz. We have the funds for it. I believe that this decision is fair and that the funds will be used efficiently at the same time.

Vladimir Putin: Does the Finance Ministry support it?

Alexei Kudrin: Mr Putin, we support it as included in the funds being allocated for our vehicle exchange programmes. Of course, this is a profitable deal. We also want it to be limited to trucks and special vehicles.

Remark: This only has to do with trucks.

Vladimir Putin: Good.

Sergei Ivanov: In fact, this trade-in system is very popular in the West, through which old cars are exchanged for new ones at a discount.

Vladimir Putin: That’s settled then. But still this is a very unusual situation: old vehicles are sold and exchanged for new ones with an additional payment made by the Defence Ministry. Yet, in general, it looks like a car scrapping programme. It is beneficial both for producers and the Defence Ministry. We have agreed on the parameters. Let’s get down to its implementation. I ask you to keep me informed should any difficulties arise during the work.