UPDATE 1-Russia to raise import tariffs on cars - Putin

Mon Aug 30, 2010 4:02pm BST

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* Premier says to increase import duties gradually

* Wants overseas carmakers to build plants in Russia

* Says very happy with new Lada Kalina Sport

(Adds Putin comments, background, detail)

By Gleb Stolyarov

MOSCOW, Aug 30 (Reuters) - Russia will increase import duties on foreign cars to encourage investment in local manufacturing plants and boost domestic players, Prime Minister Vladimir Putin told the news channel Vesti 24.

Speaking from behind the wheel of a locally produced yellow Lada Kalina Sport, Russia's leader said he wanted technologically advanced overseas producers to work alongside Russian groups like Lada-maker AvtoVAZ (AVAZ.MM).

"Here's a timeline: In some years we will gradually begin to raise the customs tariffs...But we do not want to undermine your (foreign carmakers') business in Russia -- come to us and deploy production here," he said while driving a leg of a 2,000 km (1,243 miles) journey to Chita near the Chinese border.

Russia has increased import duties on new vehicles to 25 from 20 percent since early 2009 as it seeks to support local players, many of whom were forced to the brink of collapse by last year's financial and economic crisis.

Industry leader AvtoVAZ had to be bailed out by the state to avoid bankruptcy last year, but has since lead a market recovery alongside French 25 percent shareholder Renault (RENA.PA).

Germany's Daimler (DAIGn.DE) and Italy's Fiat FIA.MI have also entered the Russian market as partners to KAMAZ (KMAZ.MM) and Sollers (SVAV.MM), respectively, while a string of others have opened or expanded manufacturing plants.

"We want you to gradually transfer technology skills, increase productivity...and the level of technical training for our specialists," Putin said, addressing foreign players.

"And for our part we will do out best to ensure a successful launch of your business," he added.

Russia has adopted a series of initiatives to boost local car and truck sales since the crisis, most notably a state-sponsored scrappage scheme that rewards drivers of 10-year-old Russian cars looking to trade in for newer models.

AvtoVAZ Chief Executive Igor Komarov said last week he was now confident enough to raise the price of a Lada from September, while on Monday the group said it was asking staff to work on Saturdays to support higher demand.

"EVERYTHING WORKS"

Putin told his Vesti 24 interviewer he was happy with the Lada Kalina, adding that he now thought the state had done enough to ensure Russia produces high quality cars.

"I think they (the conditions to produce high quality domestic cars) have been established. The Lada is compact, as you can see, not noisy. Everything works, Glonass (Russia's navigation system) works, all systems function," he said.

However Russia's Kommersant newspaper said the vehicle had to be replaced at one point during the journey after stones got into the gap between the wheel and the tyre.

Overall Russia car sales rose by 45 percent in July following a near halving of the market in 2009.

Groups such as Japan's Nissan (7201.T) and GM's Opel [GM.UL] have predicted overall 2010 gains of up to 30 percent this year, while 1.5 million visitors are expected at Russia's annual international motor show. [ID:nLDE67O0B6] [ID:nLDE67P1HU] (Writing by John Bowker; Editing by Michael Shields)

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