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RUSSIA - Car and LCV sales


Russian car and LCV sales fell 19% YoY to 138,670 units in August (after declining 27% in July and 30% in June), which resulted in YTD sales of 1,051,851 units, down 34% YoY, according to AEB.

The rate of decline in Russian car and LCV sales continued to moderate in August. However, we attribute this to a more favourable base effect as well as some potential demand being pulled forward on the back of renewed concerns that the recent rouble depreciation could impact prices. We also believe that the outlook for the rest of the year remains challenging. In particular, a number of players have already increased prices in September on the back of the latest rouble depreciation, which is likely to impact demand. Moreover, by the end of the year the base effect could well deteriorate again, as demand spiked at the end of 2014. Overall, we continue to see the market environment as rather challenging.

We highlight that Sollers saw its August sales of the UAZ brand in Russia up 3.7% YoY, while YTD UAZ sales have increased 7.3% YoY. We note that following Sollers' recent decision to unwind the loss-making production of SsangYongs (YoY drops of 54% in August and 71% YTD), UAZ remains the key source of the company's cash flows. Ford Sollers' sales also moved into positive territory, up 18% in August compared with the YoY drop of 45% YTD, which we attribute to the recent launch of the Ford Fiesta.

AvtoVAZ’s sales were down 24% YoY in August and 26% YTD. Even though the company remains the largest market player and a strong candidate for a turnaround, in our view, it continues to suffer from the adverse market environment.

Vladimir Bespalov
VTB Capital analysts


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