The Government Has Raised Import Customs Duties on Cars

In the frame of its package of measures on absorbing effects of the global economic crisis on the domestic automakers, the government ruled to raise import customs duties on foreign cars. On December 5, 2008, it released its Resoltion “On introducing amendments to the Customs Code with respect to some motor vehicles”.

In compliance with the novelty, there import duties on trucks and passenger cars have been raised; in addition, the car should be 5 years old to be attributed to the category of used ones, while recently the marginal age was 7 years. Import duties on passenger cars aged between 1 and 5 years were raised on average from 25 to 30% of their customs value along with a proportional increase of the specific rate in Euro equivalent per 1 of the volume of the engine:
up to 1,000 – up to 2.5 Euro (vs. the previous 1.4 Euro);
between 1,000 and 1,500 – 2.7 Euro (1. 5 Euro);
between 1,500 and 3,000 2.9 Euro (1.6 Euro);
between 1,800 and 3,000 - 4 Euro (2.2 Euro);
over 3,000 – 5.8 Euro (3.2 Euro).

The duties on imported cars aged over 5 years and with the engine volume under 1,000 now account for 2.5 Euro per 1 of the engine volume (vs. the previous 1.4 Euro), while those on foreign cars aged over 5 years and with the engine volume between 1,000 and 1,500 now make up 2.7 Euro per 1 (vs. the previous 1.5 Euro). The import duties on foreign cars aged over 5 years and with the engine volume between 1,500 and 3,000 cub. cm. have been currently set at the level of 2.9 Euro per 1 (1.6 Euro). As concerns imported cars aged over 5 years with the engine volume between 1,800 and 3,000 the customs duty is 4 Euro (2.2 Euro), while foreign cars aged over 5 years with the engine volume over 3,000 have been made subject to the Euro 5.8 duty (3.2 Euro)

The new duties will become effective as of January 1, 2009, and they will be in force for the term of 9 months, after which the government will decide on the course of the customs policy towards imported cars.

So, new cars foreign automakers assemble in Russia should become more competitive than their foreign analogues, while AvtoVAZ’s products will be protected form competition on the part of used foreign cars. It will be the automakers that have no production in Russia that are going to suffer at most – prices for Mitshubishi, Mazda, Nissan, and the premium-class cars, such as Mercedes-Benz, BMW, Audi, Volvo should surge.

In the fall of 2008, the rise of the domestic automarket abruptly stalled. During the 11 months of the year as many as nearly 2m foreign cars were sold in the country, or at 31% up vs. the respective index of the prior year. Specifically, the first half year was particularly successful, with month-to-month sales growing at 43-54%; however, in November the volume of sales was down for the first time over the past four years, thus reflecting a general aggravation of the market situation. The fall in sales accounted for 15% on the year-to-year basis and 19.7% vs. the prior month. In October the sales of foreign cars plunged at 5.7% compared with September 2008.

N.Volovik, Head of the Department for Foreign Trade