Russia will launch its own version of the U.S. Car Allowance Rebate System, better known as "Cash for Clunkers," on January 1 in a bid to stimulate domestic car production.

The scheme was developed by the Industry and Trade Ministry to encourage consumers to trade in older, less fuel-efficient vehicles for new ones that get better fuel economy by providing a certificate for 50,000 rubles ($1,650) towards the purchase of a new Russian-produced vehicle.

The pilot project will last from January 1, 2010 until January, 1, 2011. However, according to the Industry and Trade Ministry the project will only be properly up and running from February. A total of 9.95 billion rubles ($300 million) in federal funds has been allocated for the scheme.

The pilot project will operate in and around Moscow and St. Petersburg, and in various regions, republics and territories from the Baltic exclave of Kaliningrad to Primorye in the Far East.

"Cash for Clunkers" programs have already been implemented in the United States and Germany. The U.S. program was so popular that it ended more than two months ahead of schedule as it was running out of money.

MOSCOW, December 31 (RIA Novosti)