Expanded discount offer for specific customer base: households with two kids now entitled to 10% reduction in costs
The Russian Ministry of Industry and Trade has broadened the scope of its "Family Car" subsidized auto loan program to include families with two children. Previously, only families with three or more children were eligible for the subsidy.
Due to widespread affordability issues in Russia's auto market, Russian families have been facing challenges in purchasing new vehicles amid the ongoing wartime economy. Following instructions from First Deputy Prime Minister Denis Manturov, the program has been expanded to aid more families.
Starting May 26, families with two children will now be granted access to the subsidized auto loan program. The base discount for participants unders the program is 20% off the cost of an internal combustion engine car (-30% for electric cars), and 25% for residents of the Far Eastern Federal District (FEFD). The program encompasses medical workers, education sector employees, participants in the SVO, and their families, Russian citizens with disabilities, and families with children purchasing cars in FEFD subjects.
Under the new conditions of the "Family Car" subprogram, the discount for families with children has been reduced to 10% off the car's cost. Industry and Trade Minister Anton Alikhanov expressed hope that the measures taken would have a positive impact.
In the first quarter of 2025, sales of new passenger cars in Russia decreased by a quarter, while auto lending dropped by 45%. The average cost of new cars in Russia in April 2025 has significantly increased, with domestic cars rising by 15% year-on-year to 1.58 million rubles, and Chinese cars increasing by 7% to 3.7 million rubles.
The Russian auto market experienced a surge in sales in 2024, with dealership centers reporting a 49% increase in sales compared to the previous year, totaling 1.57 million cars. However, the start of 2025 has been marked by pessimism among automakers, as dealerships are overstocked due to the high key interest rate (21%) and the Russian government'srequest for support during a sharp decline in sales of transport vehicles.
In the midst of these challenges, subsidized loan programs like "Family Car" aim to stimulate demand for new cars among eligible families. However, the broader economic headwinds, including declining disposable incomes, sanctions, and overall market instability, may limit the program's effectiveness in reversing the market downturn.
While such programs could support a modest recovery in sales among eligible families, the macro environment suggests the impact would be constrained. Affordability issues remain the primary obstacle to new car purchases in Russia.
Businesses in the Russian auto industry are grappling with affordability issues due to the challenging wartime economy, leading to reduced sales and auto lending. In response, the Russian Ministry of Industry and Trade, guided by First Deputy Prime Minister Denis Manturov, has expanded the "Family Car" subsidized auto loan program to include families with two children, in a bid to stimulate demand and support businesses in the industry, particularly in the finance sector.
