One analysis suggests limited capacity, possible loss of government support, devaluation of the ruble and other factors may prompt global automakers to halt assembly operations in Russia and instead focus on imports.
Industry analysts say Daimler is in dire need of a local production base, given the government’s recent decision to ban the purchase by state bodies and agencies of any cars produced outside the Customs Union of Russia, Belarus and Kazakhstan.
A government official says the significant hike in state aid is related to the continuing decline of the Russian market, adding there are no plans to provide direct financial support to automakers because of World Trade Organization restrictions.
Russia, Belarus and Kazakhstan say the new tariff is meant to protect local auto makers against losses associated with significant increases of imports from the EU and in particular Germany, Italy and Turkey, in recent years.
The German auto maker is negotiating with the government on the joint assembly of up to 50,000 cars annually at partner Avtotor’s Kaliningrad plant. The project includes local tie-ups with suppliers Magna, Johnson Controls and Lear.