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Meeting on automobile industry development

April 24, 2020, Novo-Ogaryovo, Moscow Region

Vladimir Putin held a videoconference meeting on automobile industry development.

President of Russia Vladimir Putin: Good afternoon, colleagues.

We have been preparing this meeting on the automobile industry for a long time. Today we will continue the cycle of such meetings to discuss developments in the key sectors. Today we will talk about the state of the automobile industry.

As I have said, the coronavirus epidemic has broken the rhythm of the economic and business life in Russia and other countries. Many companies have suddenly had to face major challenges. The demand is plummeting, including demand for complex, high-tech products. Cooperation ties and chains have been disrupted.

The epidemic has also had an impact on the Russian automobile industry, and its indicators largely reflect the current state of the consumer market and the entire economy.

Some producers’ sales almost stopped during the first weeks of April. It is quite clear why this is dangerous: first of all, there are risks of job and wage cuts. Let me note that the Russian automobile industry employs almost 300,000 people.

Moreover, thousands of companies all across Russia – large suppliers, medium-sized and small businesses, and the retail network, including car dealerships and service stations – are one way or another connected, dependent on automobile plants.

This is why it is essential to ensure the stable operation of the automobile industry in strict compliance with all the sanitary and preventive measures; to help producers and, above all, to support demand in order to preserve jobs and incomes as well as to retain qualified specialists, engineers and workers, so that those who supply components and spare parts are confident that this joint work is reliable.

At the beginning, I would like say that we already have the experience of anti-crisis support for the automobile industry. Many of my colleagues who were working then remember 2008–2009, including the global crisis the entire world was facing. Back then, timely and tailored solutions helped car producers pass through the difficult period. Moreover, after that, the industry showed a good speed of recovery and qualitative development.

Of course, the current period has its own peculiarities, and businesses understand it very well using the example of their enterprises and regions where they operate. This is why I believe it important that together with company heads and representatives of the Government we discuss and determine specific parameters and areas of support for the automobile industry and the entire automobile market.

Let me add that several decisions have already been made. For example, 12 Russian automobile producers have been included in the list of backbone companies, those that play an exceptional role in the Russian economy. The criteria to include automobile companies in this list were objective and transparent: revenue starting from 20 billion rubles and 1,000 or more employees.

These companies can receive a special bank product: a preferential loan to replenish their working capital. The rate will be subsidised in the amount of the Central Bank’s key rate, and half of the loan is also covered by guarantees of the Finance Ministry.

At the meeting on bank lending, we agreed that this programme must be launched next week. Yesterday my colleagues from the banking sector voiced their position. Today I would like to hear your opinions on how to best adjust this mechanism in the companies’ interests.

You also know that it was decided to purchase additional vehicles with federal money. I mean 1,200 mobile ICUs for regional medical institutions. Money has already been allocated, 5.2 billion rubles. The equipment that people and the healthcare system need so much must be delivered to the regions as quickly as possible. I ask the Government and heads of the Russian regions to monitor this situation.

Of course, during this acute situation it is important for us to have strategic objectives for the development of the automobile industry and build the partnership between businesses, regions and federal agencies in a way that would ensure long-term stability in the industry and strong ties along the entire production chain.

I am confident that, like the construction industry, the automobile industry can become a fundamental, backbone sector to restore the entire economy.

Let us get down to discussing these topics.

* * *

Vladimir Putin: Thank you.

I see that the Ministry of Industry is gaining momentum and is responding promptly to the necessary issues with its colleagues from other ministries and departments, regions and industrial enterprises. Hopefully, we will go on working like this.

To everyone else here today: are there any volunteers to say anything in addition to what has been already said? Is this it? Fine, thank you.

I want to ask Mister Belousov and Mister Oreshkin to arrange a similar discussion on other sectors in the near future. I mean primarily the transport sector: both automobile and railway transport, aviation, rivers, seas – all this must be considered as a whole. The energy industry too: oil, gas, coal and nuclear power, definitely including the grid complex. We must understand that we are opening new facilities, more and more facilities are being commissioned, and we need to have them connected to the grid, to power and so on in a timely manner. And the complex itself – the basic backbone complex – we need to understand what is going on there, and if there is a need to make any adjustments to operations or provide support.

For today, I think we had a very substantive discussion. No doubt, I will instruct you to carefully analyse all the proposals and take them into account when preparing your final resolutions. Among other things, I think it is important for all enterprises to use your experience in arranging stable and safe production, and in introducing preventive measures to protect the life and health of the personnel as much as possible.

Of course, I am grateful to the companies that have joined the collaborative fight against the coronavirus, including those producing personal protective equipment and other products we need. To counter this plague we – the state, businesses and non-profit organisations, volunteer organisations and all citizens – need to act as a single force.

Now, about the steps I believe should be taken in the near future.

First, to reiterate, it is important to create stable and rhythmic work throughout the entire automotive industry and the automotive market chain from auto parts production to retail sales and servicing of automobiles. I mentioned this yesterday during a discussion with the banks. Mikhail Zadornov, I believe, has come up with a proposal to improve sales. We will see what we can do in the near future given the corona virus-related restrictions.

I want the Government and our colleagues in the regions to make informed and balanced decisions with regard to continuing or resuming the operation of businesses. Of course, this should be done in line with safety requirements and the situation in specific regions and municipalities.

Secondly, companies are actively looking for and introducing innovative approaches to doing business. Primarily, this concerns the use of modern online services – we covered this today as well – to issue bank loans or purchase housing remotely, as well as other formats that are comfortable for businesses and customers. We discussed these matters at a meeting with construction companies and with banks yesterday.

It is necessary to remove administrative barriers to using these innovations as soon as possible, including on the auto market, rather than stand in the way. I want the Government, in conjunction with the auto community, to come up with proper amendments to the regulatory framework, including the possibility of distance car sales. I mentioned this today as well.

Thirdly, it is imperative to support the consumer demand for automotive industry products.

We have a number of mechanisms and tools for such support in place already. I am referring to easy-term car loan programmes, such as Family Car, which our colleagues mentioned today, as well, or the First Car programme, under which a young or a large family can buy a locally made car with a 10-percent discount on the down payment.

I suggest allocating an additional 7 billion rubles already this year to fund such programmes and thus make them more affordable for the citizens.

Again, in this case we will support the demand for products made at Russian auto plants and, generally, as part of all measures to support the automotive industry, we will focus on the support of those companies that provide or increase the level of localisation and create high-quality, modern jobs in Russia.

Fourthly, I also propose expanding programmes for the preferential leasing of vehicles – trucks, commercial vehicles that are needed by small and medium-sized businesses in rural areas. We also spoke about this today. An additional 6 billion rubles should be allocated to programmes like Preferential Car Leasing. We also have such programmes as Russian Tractor Truck, and Own Business, which also involve a discount on advance payments to the purchaser.

In addition, in recent years, the so-called car-sharing services have been actively developing, where companies provide people with cars for short-term or long-term rental. To help these companies to not only survive in today's difficult period, but also to expand, we should help them to renew their fleet and increase the availability of these services in the regions. I propose providing preferential lease programmes for them as well and allocating 2.5 billion rubles for these purposes.

Fifth. I already spoke today about the purchasing of ambulances. I consider it necessary to allocate another 5 billion rubles (this is an response to what our colleagues said earlier) for the purchase of ambulances, thereby increasing the efficiency and accessibility of medical care, including for residents of small towns and villages. This order will certainly help stimulate demand and support automakers. But mainly this is vital today for the whole country, for the regions, for the people. And therefore I hope that the contracts will be executed efficiently and on time.

In general, I ask you to develop a set of solutions that will significantly increase the demand for vehicle equipment from the state and companies with state participation. I completely agree with your proposals. In particular, it is necessary to take an inventory of the activities of the national projects –you are also correct on this – projects that involve the purchasing of vehicles, and if possible, to carry out such purchasing ahead of schedule, already this year.

In terms of upgrading public transit, I am asking the Government together with VEB to work on the launch of an appropriate programme.

In addition, such agencies as the Interior Ministry, the National Guard, the Defence Ministry, the Emergencies Ministry as well as several other organisations will purchase about 25,000 additional vehicles this year. This decision has already been made.

It is important that state companies do not lower their orders either, first of all, for light commercial vehicles and equipment to implement investment projects. We have discussed the post today. Russian Post alone will purchase an additional 6,000 automobiles this year.

I am instructing the Government to prepare additional financial and support tools for such investment and purchases.

Of course, I am also asking for strict oversight, so that government bodies, agencies and state companies – please note this – purchase equipment that is necessary for work and not foreign limousines.

And, finally, my sixth point. In my opening remarks, I already spoke about measures to ensure the current stability of critical companies in the automobile industry as well as sufficient working capital for them.

Among other things, we need to fine-tune the mechanism of issuing loans to replenish working capital. All the details must be perfected, so that both enterprises and banks can work comfortably under this loan programme, as we discussed yesterday. I am asking you to assess other measures to provide working capital in the industry.

Let me note that all the steps outlined today must be put into practice as quickly as possible.

In conclusion, I would like to take this opportunity to congratulate the current and former staff of the Volga Automobile Plant on its anniversary, which the company president has already mentioned. It is true that 50 years ago, on April 19, 1970, the first VAZ automobile rolled off the assembly line, the iconic Kopeika, which the company president recalled today, and the great history of our automobile giant began. I wish the plant’s workers and partners success, all the best, good health and achievements in production. And, of course, I will try to take you up on your invitation. I would be pleased to visit the enterprise as soon as it is possible.

Best regards. Thank you very much.

April 24, 2020, Novo-Ogaryovo, Moscow Region