OREANDA-NEWS. March 31, 2009. Russia’s largest car makers will receive tens of billions rubles from the state in the form of loans and state guarantees, Prime Minister Vladimir Putin said Monday. Most of this money will go to AvtoVAZ whose largest shareholder is state corporation Rostekhnologii. “After analyzing the situation, I believe it is possible to contribute RUB 25 bn to repay earlier raised loans…”, Putin said and noted that the financial resources will be transferred to Rostekhnologii and will then be extended to AvtoVAZ as a loan.

Earlier, head of Rostekhnologii Sergey Chemezov said that the loan could be long-term and interest free. Head of AvtoVAZ Boris Aleshin said that the loan will be documented within two months. Putin ordered that state-run banks extend a RUB 8 bn bridge loan to AvtoVAZ for this period. “The state banks, Sberbank and VTB, should offer a short-term bridge loan worth RUB 8 bn in the coming days”, he said. An AvtoVAZ source said that the interest rate for the bridge loan will be 18%.

“The market could shrink more than 60% in 2009”, Industry and Energy Minister Victor Khristenko said and added that the ministry has slashed its forecast compared to the December estimate. Aleshin said that the 2009 will be the worst for the Russian automotive industry after 1998. “The market situation is unfolding under a dramatic scenario… Generally speaking, we have never been in such a situation in post-Soviet history”. In February 2009, demand for all car makers in Russia plunged 38%, according to European Business Association.