Neglecting the favourable base effect, car sales dipped well below the waterline to a seven-month low. Component-wise, the premium segment nevertheless clearly demonstrated resilience, while the mass market bore the brunt. Thus, it coincides with our expectations of an upcoming slack in sales after FX-driven demand in 1Q14, when people rushed to buy vehicles at old rouble prices amid the rouble depreciation. The scale of the decline looks a bit excessive though and is unlikely to be sustained, especially given a double-digit contraction in May-August 2013. For the economy as a whole, such a fall in car sales could also indicate a slump in local consumption growth last month, according to our macro team.
All Russian auto producers underperformed the broader market. Sollers’ sales were down 11% YoY in April and 20% in January-April, with SsangYong and UAZ brands showing similar rates of decline. Ford sales (carried out through the 50:50 joint venture with Sollers) dropped 38% YoY in January-April and 30% YTD. Even excluding the Focus, Ford sales were down 8% YoY in April (up 18% YTD).
AvtoVAZ’s sales fell 16% in April and 15% YTD, while GAZ LCV sales declined 13% in April and 16% YTD.
Despite these discouraging trends, we still like Sollers (due to its attractive valuation, and the fact its risks are more than priced in, in our view) and AvtoVAZ (on its potential turnaround story).