Russia 'may ban car imports' if West applies new sanctions

Russia may tighten retaliatory sanctions against Western nations to include a ban on imports of cars, if the United States and the European Union impose additional sanctions on Moscow, daily newspaper Vedomosti reported on Monday.

The impact of the measure on many foreign automakers would be softened because their factories inside Russia would not be affected, but high-end brands such as Daimler AG's Mercedes-Benz could be more vulnerable as they have to be imported.

No one at Daimler was immediately available for comment.

The West accuses Russia of arming separatist rebels in Ukraine, an allegation Moscow denies. Western governments imposed sanctions on Moscow, including on its financial and energy sectors, and Russia has already hit back by stopping imports of many food products.

Vedomosti reported that a ban on vehicle imports was among additional proposals put before Russian President Vladimir Putin, saying he had rejected the idea but it remained an option in the event that Western nations impose new sanctions.

Citing an unnamed government source, the paper said Russia may fully or partly ban imports of cars from countries that impose sanctions on Moscow, though it also quoted another source saying the government had not yet been instructed to prepare the introduction of any new measures.

Russia's industry ministry had no immediate comment.

The article did not specify if the proposed ban would cover all imported vehicles, including trucks and buses as well as passenger cars.

Imports accounted for 27 percent of passenger car sales, 46 percent of trucks and 13 percent of buses in the first half of 2014, Vedomosti said.

Foreign carmakers have invested around $5 billion in setting up local production in Russia since the mid-2000s. The government encouraged the trend by raising import duties on cars and lowering tariffs on parts.

US automaker Ford Motor Co, Germany's Volkswagen AG, France's Renault SA, Japan's Toyota Motor Corp and South Korea's Hyundai Motor Co are among those which produce locally.

Daimler has a joint venture with Russian truckmaker Kamaz OAO to assemble Mercedez-Benz trucks in Russia, but it does not make passenger cars in Russia.

(China Daily 08/19/2014 page12)