According to our macro team, the monthly decline in car sales on an SA basis advanced to 1.2% (from slight growth of 0.4% the previous month), mainly on the back of contracted sales of local brands. Importantly, even though June’s doubledigit YoY decline was close to the one in May, last month there was a much less negative calendar factor than in May (number of working days in June 2013 was 1 less than in June 2012, while in May the difference was 3 days) and therefore the WDA YoY dynamics of car sales deteriorated further to
In our view, the planned introduction of interest rate subsidies on car loans (could happen as early as July, according to earlier statements by government officials) will likely support the market.
Sollers’ sales declined 1% in June and were down 5% in 1H13. Meanwhile, Sollers reported that its total sales (i.e. including exports) were down just 0.8% YoY in 1H13 due to increased exports. Ford sales (carried out through its 50:50 JV with Sollers) fell 24% in June and 19% YTD, mostly driven by the tough competition in the
GAZ’s LCV sales fell 11% in June and 4% YTD. AvtoVAZ’s sales were down 17% in June and 10% YTD.
We continue to prefer Sollers in the Russian automotive universe due to good dividend prospects, exposure to growth through JVs, low leverage, good corporate governance and undemanding valuations.