Russia unveils 20-billion-dollar plan to save car industry

The government unveiled a plan to invest almost 20 billion dollars over the next decade to transform the embattled Russian car industry into a major global player.

Some 584 billion rubles (19.6 billion dollars) of state funds will be invested in the car industry to 2020, Industry Minister Viktor Khristenko said after a cabinet meeting chaired by Prime Minister Vladimir Putin.

"Our end goal is to have in this country a modern auto industry which includes the whole supply chain up to the end product," Putin said, according to a transcript of his remarks on the Russian government's website.

"We need to work hard to make the national auto industry more competitive," he added.

Russia's auto market, before the global financial crisis considered to have the best growth prospects in Europe, shrunk 49 percent in 2009. It has begun to stabilise but in January, it was still down 37 percent compared with a year earlier.

Worst hit by the crisis has been Russia's biggest carmaker Avtovaz, builder of the Lada car and employer of more than 100,000 people, which officials admit has been pushed to the brink of bankruptcy by the crisis.

Putin praised Russia's success in attracting virtually all the world's top auto manufacturers to invest in the country and manufacture their brands at Russian plants.

Including investment by foreign auto companies, the government expects a total of up to 1.2 trillion rubles (40 billion dollars) to be invested in the auto industry by 2020, Khristenko said.