Prime Minister Vladimir Putin unveiled plans on Friday to encourage consumers to buy only Russian-made cars, in a bid to help struggling domestic automakers overcome the economic slowdown. On a visit to Naberezhniye Chelny, home to Russian truck maker Kamaz, Putin said he expected both Russian motorists and state companies to buy locally-made cars, as imports were “absolutely inadmissible” in times of crisis. “The most important task is to resuscitate consumer demand in the population. We need to support people,” Putin said in Naberezhniye Chelny, in comments broadcast on state television. The government plans to subsidize loans for consumers buying locally produced mass-market cars, Putin added. “Today when our carmakers are forced to reduce production I consider it absolutely inadmissible to spend money to buy imported cars,” Putin said, according to the RIA Novosti news agency. With the economic crisis eating away at Russians' savings, demand has dropped dramatically in its once booming auto market. Major foreign and domestic carmakers are adjusting production plans, with top Russian automotive producers AvtoVAZ, GAZ and Kamaz turning to state for help. Ford Motor Company has it will be halting production for about a month at its factory in Russia for almost month from Dec. 24. The meeting came as thousands of drivers are scheduled to protest higher tariffs on imported cars in Russia's Far East on Sunday, in demonstrations that some analysts believe could spill into wider social unrest. The government raised import tariffs on second-hand foreign cars to support the domestic car production, a step which led to protests in the Far East, where thousands make a living importing and servicing Japanese-made cars. Thousands of people rallied in Vladivostok and other towns in the Far East on Jan. 14. Meanwhile, the net outflow of capital from Russia in 2008 will be around $100 billion (70 billion euros), the deputy central bank chairman said on Friday, underlining the extent of capital flight amid the financial crisis. Russia experienced no major outflows in the first and third quarters and had net inflows in the second quarter but the outbreak of the crisis just before the fourth quarter transformed annual figure, Alexei Ulyukaev said. “Starting in September and October, we began accumulating capital outflow and, after 11 months, it is around 80 billion dollars,” he told Russia's English language channel Russia Today in an interview. Separately, in Frankfurt, Volkswagen, the biggest European car maker, has asked for more than 10 billion euros ($14 billion) in state loan guarantees for its financial services unit and bank, a press report said on Friday. But the German banking sector stabilization fund Soffin, which has been accorded 480 billion euros for loan guarantees and cash injections, is only willing to provide four-five billion euros in guarantees to VW, Der Spiegel said.
