According to our macro team, on an SA basis car sales declined 1.8% MoM on the back of lower purchases of local brands (Lada and UAZ) and slower activity in the premium segment. This was mostly a recoil after the sudden jump in February and coincides with the unfavourable calendar factor: this March there were only 20 working days, one less than in 2012. The overall picture on car sales underpins our view that the growth in consumer spending is stabilising at low levels and will not rebound soon, as cooling lending and tight fiscal policy drag it down.
While we believe that some of the decline in March was driven by the market correcting after relatively good sales in January-February, we do not expect any major improvements in the coming months, with some improvement more likely in 2H13. Our full-year forecast still implies low single-digit growth for the market this year (+2%). Sollers remains our preferred stock in the auto universe due to its good corporate governance, prospects for dividend payments and long-term growth opportunities through its joint venture with Ford.