Russia to prop up ailing car industry with a $275 Million to try and boost sales across the country.

Russia's government will spend 20 billion rubles ($275 million) to support the car industry in the first half of 2016, Industry and Trade Minister Denis Manturov said on Tuesday.

Manturov said in an interview with Rossiya 24 television the government would extend measures in place since car sales were hit by a sharp drop in the ruble and an economic slowdown because of weak oil prices and Western sanctions over Ukraine.

The measures include a car-buying program that offers discounts to people trading in their old vehicles, a scheme for scrapping cars and subsidies for car loans and leasing.

"The decision has been made by the prime minister to extend the program of supporting demand into next year ... So far, the decision has been made for the first half year for around 20 billion rubles," Manturov said.

Some of the measures were introduced in 2013 and the scheme was strengthened in 2014 and 2015.

New-car sales took their biggest hit this year in November, falling 43 percent year-on-year, according to the Association of European Businesses (AEB) lobby group.

Russian car sales may fall another 14 percent next year if the country's economy heads into a second year of recession, according to PricewaterhouseCoopers. As few as 1.1 million cars may be sold during 2016 if the slowdown deepens and the government doesn't support the industry, according to the worst-case scenario, Oleg Malyshev, a partner at PwC in Russia, said.

That compares with a projected 1.28 million units sold this year, down 45 percent from 2014. PwC's base-case view is that sales will stay at the same level next year.

REPORT HERE