Red Tape, Corruption Could Impact Russia's Cash for Clunkers



Source: http://www.businessweek.com/news/2010-03-05/russian-cash-for-clunkers-may-founder-on-corruption-red-tape.html

Business Week - March 5, 2010

Situation
Dealers worry Russia's Cash for Clunkers program won't meet goals
Concerned over government red tape, corruption
Russian car sales down 56% last year
More than 1,560 dealers across country expected to participate
Significant Points
Russia offering 200K vouchers worth $1,677 toward purchase of Russian car
Customers must turn in car 10 years old or older; AvtoVAZ likely to benefit most
More than 10 foreign companies have joint ventures in Russia
Dealers wary because they must pay owners for old vehicles
Then hope to reclaim cash from government; worry over program transparency
Experts say target audience likely to purchase inexpensive vehicles under Cash for Clunkers
Says
"If there are bureaucratic delays and corruption in its implementation, the program may not have the same beneficial impact as we have seen in some European markets." -- Stanley Root, manager automotive group, PricewaterhouseCooper

"The program is about to start, but there is still no transparency in the process. The government is expected to cover towing costs, for example, but it's unclear how to get the rebate." -- Valery Sheromov, Piter-Lada dealer

"The target audience for this program differs from that in Europe and the United States. Drivers who will participate are mostly poor and will most likely buy cheap AvtoVAZ models." -- Oleg Datskiv, founder, Auto-Dealer.ru