Russia's financial crisis has reached the country's automotive industry, with the largest automaker, AvtoVAZ, announcing on December 22 it has temporarily halted production because of an interruption in the supply of parts.
The announcement follows scores of demonstrations held across Russia in recent weeks to protest a planned tax hike on imported used cars, which many Russians consider a more reliable option to buying domestic. RFE/RL Russian Service correspondent Mikhail Sokolov discussed these issues with Vyacheslav Lysakov, the head of the "Freedom of Choice" car owners' organization.
RFE/RL: Over the weekend, we saw protests against the proposed import-car tax in Kazan, Belgorod, Yekaterinburg, Yuzhno-Sakhalinsk, and Moscow. In Vladivostok, where protesters tried to gather for two days straight, the demonstrations were broken up in a fairly harsh manner, with dozens of people arrested, and OMON [special police] troops from Moscow and Daghestan brought in for crowd control. Do you think the wave of public anger at the government's decisions has already reached its peak? Or will it peak as more and more pressure is put on demonstration organizers?
Vyacheslav Lysakov: I think that this wave is actually only beginning to rise, because a fundamental portion of the Russian population -- the main group of car owners, especially in the European parts of Russia -- is still not aware of these new customs duties and what they're all about. The duties, I'll remind you, come into force on January 11. The customs value on used cars between one and three years old will go from 25 to 30 percent. For cars between three and five years, it goes up from 25 percent to 35 percent.
RFE/RL: Is it possible to estimate approximately how much this will translate into, in euro terms?
Lysakov: Yes, it can be calculated. The final price of a car will increase in the new year, if you put together all payments -- that is the VAT, import tax, (which by the way is tied to engine capacity -- and the sharp increase will occur precisely in the 1.8-liter segment and higher) -- on average a car will cost 3,000 to 4,000 to 5,000 euros more. Some cars less, some more. This is a lot more than the 5 or 10 percent that most car owners have heard about. They may have heard about it, but they haven't done the math yet.
So far, car owners across Russia haven't quite grasped it. But car owners in the Russian Far East have. Again, the main myth circulating in some places is that those who live in the Far East want to drive cars with a right-hand steering wheel, and many people believe that the import tax is only on cars with a right-hand steering wheel. It's not true, dear listeners -- the tax is being imposed on all cars, on all used cars.
Secondly, it has affected the Far East because the region is almost solely dependent on the auto business there. So people have basically begun losing their jobs, the market has come to a halt, people are unable to feed their families.
RFE/RL: And how many people will this affect? An official from the Ministry of Industry and Energy said it will affect no more than 5,000-7,000 people in the Far East.
Lysakov: Yes, we heard that, and the estimable [Deputy Prime Minister] Igor Sechin said that they were "a bunch of punks."
RFE/RL: He means the organizers. And you have to put punks in jail.
Lysakov: Organizers, yes. Meaning, punks who muddy the water. In any case, it wasn't repudiated; it was reproduced in [the daily newspaper] "Kommersant." But we also heard [Prime Minister] Vladimir Vladimirovich [Putin] say that the real problem, it turns out, is that people in the Far East and other far-flung regions dream of buying a Russian-made Zhiguli, but that the delivery for such cars is very expensive.
I can say that the root of the problem has no relation to that whatsoever. Absolutely none. We're not talking about consumer caprice here. Parenthetically, I can add that even if the cost of transport and delivery weren't an issue, no one in the Far Eastern Federal District needs this car. Even if these cars were personally delivered to the region and given away for free, no one needs them.
'No Need' For Zhigulis
RFE/RL: You can hardly see them on the streets anymore, to be honest.
Lysakov: Even if you had a mass giveaway, people would never agree to such a headache. The root of the problem is actually in the fact that people are losing their jobs. And unfortunately, the government with its various pronouncements has demonstrated perfectly clearly that they don't see this problem at all. They don't understand it.
Speaking simply, they're deflecting the arrows in a completely different direction -- at some kind of plot by the several thousand people who are affected by this, people who to them practically represent the margins of society, who have decided to start an uprising.
In fact, the [car-import] business employs hundreds of thousands of people. And if you look at this business in detail, it turns out it's not only salesmen and the people who import the cars, which is what a lot of people think. There are also the people who work on sea cargos, railway transport, storage units, tourism-related transportation offices, sailors, dockworkers.
All of these people work in the auto sector -- everyone has a job, everyone works their hours, everyone receives an income, everyone pays taxes. There's probably a criminal element in some of this, but where in Russia is that not the case?
The announcement follows scores of demonstrations held across Russia in recent weeks to protest a planned tax hike on imported used cars, which many Russians consider a more reliable option to buying domestic. RFE/RL Russian Service correspondent Mikhail Sokolov discussed these issues with Vyacheslav Lysakov, the head of the "Freedom of Choice" car owners' organization.
RFE/RL: Over the weekend, we saw protests against the proposed import-car tax in Kazan, Belgorod, Yekaterinburg, Yuzhno-Sakhalinsk, and Moscow. In Vladivostok, where protesters tried to gather for two days straight, the demonstrations were broken up in a fairly harsh manner, with dozens of people arrested, and OMON [special police] troops from Moscow and Daghestan brought in for crowd control. Do you think the wave of public anger at the government's decisions has already reached its peak? Or will it peak as more and more pressure is put on demonstration organizers?
Vyacheslav Lysakov: I think that this wave is actually only beginning to rise, because a fundamental portion of the Russian population -- the main group of car owners, especially in the European parts of Russia -- is still not aware of these new customs duties and what they're all about. The duties, I'll remind you, come into force on January 11. The customs value on used cars between one and three years old will go from 25 to 30 percent. For cars between three and five years, it goes up from 25 percent to 35 percent.
RFE/RL: Is it possible to estimate approximately how much this will translate into, in euro terms?
Lysakov: Yes, it can be calculated. The final price of a car will increase in the new year, if you put together all payments -- that is the VAT, import tax, (which by the way is tied to engine capacity -- and the sharp increase will occur precisely in the 1.8-liter segment and higher) -- on average a car will cost 3,000 to 4,000 to 5,000 euros more. Some cars less, some more. This is a lot more than the 5 or 10 percent that most car owners have heard about. They may have heard about it, but they haven't done the math yet.
So far, car owners across Russia haven't quite grasped it. But car owners in the Russian Far East have. Again, the main myth circulating in some places is that those who live in the Far East want to drive cars with a right-hand steering wheel, and many people believe that the import tax is only on cars with a right-hand steering wheel. It's not true, dear listeners -- the tax is being imposed on all cars, on all used cars.
Secondly, it has affected the Far East because the region is almost solely dependent on the auto business there. So people have basically begun losing their jobs, the market has come to a halt, people are unable to feed their families.
RFE/RL: And how many people will this affect? An official from the Ministry of Industry and Energy said it will affect no more than 5,000-7,000 people in the Far East.
Lysakov: Yes, we heard that, and the estimable [Deputy Prime Minister] Igor Sechin said that they were "a bunch of punks."
RFE/RL: He means the organizers. And you have to put punks in jail.
Lysakov: Organizers, yes. Meaning, punks who muddy the water. In any case, it wasn't repudiated; it was reproduced in [the daily newspaper] "Kommersant." But we also heard [Prime Minister] Vladimir Vladimirovich [Putin] say that the real problem, it turns out, is that people in the Far East and other far-flung regions dream of buying a Russian-made Zhiguli, but that the delivery for such cars is very expensive.
I can say that the root of the problem has no relation to that whatsoever. Absolutely none. We're not talking about consumer caprice here. Parenthetically, I can add that even if the cost of transport and delivery weren't an issue, no one in the Far Eastern Federal District needs this car. Even if these cars were personally delivered to the region and given away for free, no one needs them.
'No Need' For Zhigulis
RFE/RL: You can hardly see them on the streets anymore, to be honest.
Lysakov: Even if you had a mass giveaway, people would never agree to such a headache. The root of the problem is actually in the fact that people are losing their jobs. And unfortunately, the government with its various pronouncements has demonstrated perfectly clearly that they don't see this problem at all. They don't understand it.
Speaking simply, they're deflecting the arrows in a completely different direction -- at some kind of plot by the several thousand people who are affected by this, people who to them practically represent the margins of society, who have decided to start an uprising.
In fact, the [car-import] business employs hundreds of thousands of people. And if you look at this business in detail, it turns out it's not only salesmen and the people who import the cars, which is what a lot of people think. There are also the people who work on sea cargos, railway transport, storage units, tourism-related transportation offices, sailors, dockworkers.
All of these people work in the auto sector -- everyone has a job, everyone works their hours, everyone receives an income, everyone pays taxes. There's probably a criminal element in some of this, but where in Russia is that not the case?
