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Russian auto sales rebound strongly in August

Russian car and LCV sales increased 15% YoY in August, which brought YTD growth to 14% (over 1.9mn vehicles), according to the Association of European Businesses.

On a SA basis, auto sales rebounded strongly in August with MoM growth reaching 4.3% after advancing slightly above 3% in the period from December 2011 to July 2012. Both the weakness of the previous period and the strength of the August data were driven by local producers, with Lada significantly accelerating its sales in the last month of August on the back of an improvement in the sales of Lada Granta and Largus. Strong AvtoVAZ sales pushed domestic brand sales to positive YoY growth for the first time since September 2011. Sales of foreign brands continued to progress, adding 1.9% MoM SA and keeping YoY growth above 20% (20.7% this time). Our macro team highlights that strong car sales in August will likely support retail sales data (that at the same time will be suppressed by food inflation), but this will only impact the CBR’s next decision. Advancing sales of foreign brands will continue to push imports higher.

We highlight GAZ's strong LCV sales in August, which increased 9% YoY and brought the YTD performance to -1%. Were this new trend to persist, we would see it as encouraging as the company appears to be more focused on profitability rather than absolute sales. Sollers' sales increased 4% YoY, largely driven by a 5% YoY decline in UAZ and a 27% increase in SsangYong. Meanwhile, with a 23% increase in YTD sales, Sollers continues to outperform the market. We also highlight that Ford sales (carried out through a 50:50 JV between Ford and Sollers) have increased 19% YTD and 28% in August. AvtoVAZ’s 0.4% YoY rise in monthly sales was the first positive result since October 2011. Overall, we see the latest trends as supportive for domestic auto producers. Sollers and GAZ are our top picks in the Russian auto universe, while we remain negative on AvtoVAZ. 

Vladimir Bespalov
VTB Capital analyst

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