Russia Bans State From Buying Foreign-Made Cars to Help Locals

Prime Minister Dmitry Medvedev said he ordered a ban on Russian state and municipal purchases of foreign-manufactured cars and machinery to support local producers.

The ban will include cars for high-ranking officials, public transportation, emergency-service vehicles as well as agricultural and construction machinery, according to a statement from Medvedev’s meeting with deputy prime ministers posted today on the government’s website.

Russia is struggling with the slowest economic growth since a 2009 recession as the U.S. and European Union threaten to add to sanctions following President Vladimir Putin’s annexation of Crimea. Sales of new cars in Russia plunged by the most in more than four years in June as a weaker ruble curbed demand. OAO AvtoVAZ, Russia’s biggest carmaker, plans to cut 19 percent of its jobs this year, the company part owned by Renault SA said last month.

“The state buys a lot; the budget allocates enormous resources for the purchase of goods and services,” Medvedev said. “It’s better if these resources go to local companies rather than foreign producers in cases when local companies are able to compete with foreign producers based on quality and price.”

The ban applies only to vehicles made outside of Russia, not to foreign brands produced in Russia that meet localization requirements, RIA Novosti reported, citing Deputy Prime Minister Arkady Dvorkovich as saying.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE