Yesterday, the company announced that few days before the end of the year its volume sales in 2007 exceeded 80,000, which was guided by the management upon release of 9M07 results. Separately the company reported that its employment at year end was at 3,800. In terms of plans for 2008, Auto intends to open its first auto center in Russia in the summer and also launch a premium brand, where it will sell cars up to two years of age.
Our view: In our opinion, the 80,000 target was not overly ambitious especially that it was given just 5 weeks before year end. As such we see this as neutral. This means that 4Q07 volume sales were at some 20,000 cars, which constitutes more than 20% y/y improvement and some 7% q/q fall mainly due to seasonality. For the employment number, it means that it grew by some 4% or 140 people during 4Q07 and by some 32% to 900 people since end of 2006. In our opinion summer deadline for first Russian outlet looks ambitious. Even if it is opened in mid-year we would expect first 1-2 months to be devoted for stocking and purchasing so Russia’s influence on 2008 total sales is likely to be very limited. Plan regarding launching a premium brand is new information and we view it positively.