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Russia may spend extra $160 mln on car scrappage scheme

Published 09/10/2010, 09:43 AM
Updated 09/10/2010, 09:48 AM

* Govt plans to spend extra 5 bln roubles on scheme-source

* Money to fund programme in 2011

MOSCOW, Sept 10 (Reuters) - Russia may spend an additional 5 billion roubles ($161.8 million) on the extension of the car scrappage scheme that has helped to revive the country's auto industry, a source close to the matter told Reuters on Friday.

The funds, to be disbursed next year, would raise the government's total spending on reviving the sector to 25 billion roubles in 2010-2011, with 13.5 billion to be spent next year.

"It's not decided yet, part of the money may go to car scrappage ... but that would only include compact (autos)," the source said, saying the extra spending is included in the 2011 state budget.

Officials from the finance and industry ministries declined to comment on Friday.

According to the Association of European Business (AEB), Russian car sales grew 14 percent in January-August over the same period last year. In August alone sales grew 51 percent year-on-year.

The scrappage scheme was launched in March and sparked an almost immediate pick-up in sales following the crisis year of 2009.

The programme -- which has already been extended once and is expected to run until early next year -- offers drivers 50,000 roubles ($1,623) to trade in 10-year-old locally produced cars.

On Sept. 7, Russia's biggest lender Sberbank asked the government to extend the scrappage scheme for at least two more years as it seeks to revive the plant of bankrupt car manufacturer IzhAvto.

(Reporting by Gleb Stolyarov; Writing by Lidia Kelly; Editing by Dmitry Sergeyev and David Cowell)

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