Russia’s “cash-for-clunkers” program, which begins on March 8, may fall short in its goal of boosting new-car sales because of bureaucratic red tape and corruption, dealers and analysts said.
The government will offer 200,000 vouchers worth 50,000 rubles ($1,677) toward a new Russian-built automobile to people who turn in a car more than 10 years old. More than 10 foreign car companies have factories or joint ventures in Russia, though the main beneficiary of the incentives will probably be OAO AvtoVAZ, the country’s largest carmaker, whose least expensive model retails for about 160,000 rubles.
“If there are bureaucratic delays and corruption in its implementation, the program may not have the same beneficial impact as we have seen in some European markets,” Stanley Root, head of PricewaterhouseCoopers LLP’s automotive group, said in an e-mailed statement earlier this week.
Russia is following countries around the world that introduced incentive programs to increase slumping car sales during the worst global recession since World War II. The government has allocated 11.5 billion rubles for the program, which runs though Nov. 1. A similar plan in the U.K. generated 330,722 sales between its inception in May and Jan. 24, according to the government.
Some dealers said they’re wary of the program, which requires them to pay owners for their old vehicles, then reclaim the cash from the Industry and Trade Ministry.
