Car and LCV sales in Russia increased 14% YoY in April (to 266,267 units) and 18% YoY in January-April (to 880,540 units), according to the latest data from the Association of European Businesses.
While the growth rate for the market is slowing down, as we expected, in our view the double-digit rise in April is still encouraging and points to robust underlying demand.
Sollers’ sales (excluding Fiat, as the company stopped selling Fiat vehicles earlier this year) increased 27% YoY to 26,723 units in January-April, mostly due to the strong sales of SsangYong models. Sollers’ joint venture with Ford has also outperformed so far, with Ford sales in Russia up 29% YoY to 39,652 units in January-April.
GAZ sold 24,191 LCVs in January-April, almost unchanged YoY. We are not concerned about the company’s performance in the segment as it is fully in line with our full-year forecast of flat LCV sales in 2012. Moreover, given the termination of various government programmes, which supported sales last year to a certain extent, as well as the positive trend in monthly sales since the start of the year, we believe that GAZ’s LCVs will continue to enjoy relatively good commercial demand. We also note that LCVs represent less than a third of GAZ’s business in terms of revenues (according to our estimates), while profitability, which has been the company’s focus lately, is also an important dimension.
Elena Sakhnova, Kevin Whyte, Vladimir Bespalov
VTB Capital analyst
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