Surtax on Large Cars Could Wipe Out Sales of U.S. Models from Russian Market

Russian auto dealers said a planned surtax on cars with engine sizes over 2.5 liters could shut U.S. automakers out of the Russian market.

Almost all the models delivered to the Russian market by America's G.M. and Chrysler, as well as Ford models manufactured in the U.S., have engines larger than 2.5 liters. European and Japanese automakers have a more extensive line of engine sizes and the majority of those delivered to Russia are equipped with smaller engines.

Market analysts said the government might issue a "special decision" concerning import of U.S. models after introducing the new "special tax."

Valery Tarakanov, the general director of Rolf, an official Mitsubishi dealership, said the law would also hurt sales of full-sized utility vehicles such as the Mitsubishi Pajero, Toyota Land Cruiser and Nissan Patrol. He said that the government might enact a one-time reduction in customs rates to ease introduction of the new tax.

However, a reduction in customs charges on imported cars "is not to be expected," officials at the State Customs Committee said, citing Russia's current budget difficulties.

Introduction of the special tax will generate 3 billion rubles in budget revenues, the Finance Ministry said. However, "the government has still not made a final decision on the matter," a ministry official said.

Gaz To Supply Assembly

Kits To Iran This Year

Leading Russian truck and compact car manufacturer Gorky Automobile Plant (GAZ) is to deliver 1,430 Gazelle small truck assembly kits, worth $8.5 million, to Khawar Industrial Group in Iran in this summer, Gaz representative Gennady Suvorov said.

According to the terms of a contract signed in April, Gaz will deliver assembly kits for Gaz-3302 and Gaz-33023 small trucks, Gaz-2705 vans, Gaz-32213 minibuses, Gaz-3302 and Gaz-30273 in June and July.

If this delivery is carried out successfully, the companies plan to sign a contract for the delivery of a further 3,000 kits by the end of the year.

Gaz decided to assemble the cars in Iran because that country has a law which forbids the import of finished cars. Iranian companies, which produce components, will also participate in the project. Initially Iranian companies will account for 20 percent of production and will be gradually increased to 40 percent.

The first consignment of 20 car assembly kits have arrived in Iran. A total of 5,000 cars may be assembled by the end of the year. The Iranian plant has a production capacity of 30,000 cars per year.