19 february 2010

Prime Minister Vladimir Putin meets with Minister of Industry and Trade Viktor Khristenko

Prime Minister Vladimir Putin and Minister of Industry and Trade Viktor Khristenko discussed one of the new measures to support the automotive industry. Under the programme, operational from March 8, car owners can use money from selling an old car for scrap to purchase a new car. Prime Minister Putin said “the process must not be cumbersome for people.”

Transcript of the beginning of the meeting:

Vladimir Putin: Mr Khristenko, last year we implemented a series of initiatives to support the automotive industry, including government purchase orders and subsidised car loans. However, there is one measure we haven't tried out yet, which met with success in other countries last year and in years past. I'm referring to the programme that allows car owners to turn in their old cars for scrap in exchange for a credit toward the purchase of a new car. We agreed to launch this programme on March 8. I would like to hear about the progress we've made in this direction.

It is a big challenge for us, as I've mentioned on several occasions, since we don't have the necessary infrastructure. We've never done anything like this before, and so we lack the facilities for the utilisation of old cars and the regulatory framework.

What steps have been taken to launch this project to support the automotive industry?

Viktor Khristenko: Mr Putin, the plan is nearly finalised. You are correct in saying that this programme poses a new challenge for us. Nevertheless, we have already carried out several steps. Our ministry has issued the orders necessary to put this resolution into effect. We've also approved the timeline for this experiment and the list of eligible car models. Consumers will be able to choose from 66 models that are assembled here in Russia.

We've also approved the scrap certificate form and begun the process of choosing dealers and scrap yards, which is an important step in the process.

Manufacturers have selected over 1,200 outlets in Russia to sell the cars from the afore-mentioned list of 66 models.

Some 300 scrap yards have submitted bids as well. Of course, these scrap yards vary...

Vladimir Putin: You said five or six before.

Viktor Khristenko: That's true. There are five operational first-class scrap yards where cars are shredded to produce premium-grade, expensive scrap metal that can be used in electric steel-making furnaces.

The sixth such scrap yard will be put into operation soon. The rest are second-class facilities, where cars are crushed, pressed and cut. The metal produced here is of a lower grade. Even though this metal is a bit cheaper and less refined, it can also be used in the metal industry.

Regional authorities have drafted proposals regarding these 300 centres. This programme covers almost the whole country with the exception of one territory, the Jewish Autonomous Region, where there are apparently no such outlets or scrap yards. The remaining regional governments are looking into ways to participate in this programme.

What else needs to be done? First, we must finish inspecting dealers and scrap yards by the end of February so that we can launch a pilot project.

We hope to launch it on March 1 so that the programme is up and running by March 8.

We're also attending conferences with car manufacturers and dealers, which is another critical step.

The manufacturers are interested in promoting their cars and have been offering dealers additional incentives, such as installment payment plans, to attract more customers. We believe that this approach is sound and that it will contribute to the overall success of this experiment and the programme in general.

Another innovative element in our work concerns greater publicity and the use of information technology. This initiative involves putting all the relevant information online at the ministry's website. Dealers making a sale can go to our website to fill out the registration forms and certificates. We will have instant access to all data on the sale of new cars and the scrapping of old cars. This new system will allow us to monitor operations at all participating dealerships throughout the country.

Also, since this programme is completely new both for the government and ordinary people, we set up a call centre where consumers can ask questions. We have already received a lot of questions from potential participants. They are very interested in the programme, which is critical. This means that this experiment has an excellent chance of succeeding.

Another task that we face is setting up a comprehensive and permanent regulatory system for the disposal of old cars by September.

Vladimir Putin: This programme is one in a series of measures to support the automotive industry. The whole procedure of selling an old car for scrap and purchasing a new one must not be burdensome for people.

I am asking you to do everything possible to minimize the administrative and bureaucratic burden on consumers.

Viktor Khristenko: We'll try our best.

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