OREANDA-NEWS. June 10, 2010. Domestic passenger car sales fell 3.2% MoM in May, amounting to 157,937 units, according to the AEB monthly report. AvtoVAZ sales declined 13% MoM, while GAZ Group sales were off by only 2%. By contrast, Sollers’ sales jumped 74% MoM, reflecting strong demand for its brand names, particularly for UAZ (zero MoM growth) and for Ssang Yong brand (+55% MoM), reported the press-centre of OTKRITIE Financial Corporation.

View: In spite of the ‘cash-for-clunkers’ recycling program, car sales in May decreased in part because of holidays, when demand traditionally lower. AvtoVAZ saw its share of the market rise from 27% to 29%, while Sollers’s market share remained at 4%. Despite the dip in May, we expect rapid growth in the sales of domestic models through the end of the summer. Thus far, we have not seen an increase in the demand for imported models, a likely byproduct of the overall effectiveness of the ‘cash-for-clunkers’ program.

Valuation and Action: We view these figures as positive for Sollers. At present, we have no a rating or target price for that stock.