Moscow--Russia on Monday said it would pump around $425 million into fuelling its crisis-hit automobile industry as Volkswagen became the latest manufacturer to cut back operations in the country.
Prime Minister Dmitry Medvedev announced the plan to boost the beleaguered sector that has seen sales plummet on the back of economic turmoil in Russia caused by falling oil prices and Western sanctions over Ukraine.
The funds -- some 25 billion rubles or 390 million euros -- will go towards cutting credit costs for cars and the purchase of new vehicles by government bodies, Medvedev was quoted as saying by Russian news agencies.
"If there are no support measures taken the market will fall by 50 percent," industry minister Denis Manturov warned.
The announcement of the government's intervention to bolster the stalled auto industry came as Volkswagen said it would cut around 150 temporary staff and reduce the number of shifts at its Kaluga plant in western Russia.
"In the first months of 2015, the Russian automotive market continued to feel the effects of a weak economy, significant price rises and high interest rates. We do not expect to see a change in these factors within the next months," the German auto giant said in a statement.
The cuts follow the decision last week by US titan General Motors to withdraw its Opel brand from the country and close its factory in Russia's second city of Saint Petersburg.
The Russian market -- which rose to become Europe's second biggest in 2012 -- has crashed headlong into crisis, with the collapse of the ruble hitting consumers hard as prices soared.
Sales for February were down 38 percent compared with figures from a year earlier, the industry says.
AFP
