Bogdans 2011 output undershoots market growth

Bogdan Motors (LUAZ UK) reported its 2011 output on Friday: 21,093 vehicles (+3.0% yoy), which includes 20,240 passenger cars (+5.5% yoy), 203 buses and trolleybuses (+9.1% yoy), and 650 commercial vehicles (down 37.2% yoy).

Roman Dmytrenko: Bogdan’s 3% increase in production is extremely weak considering new passenger car sales rose 33% yoy in Ukraine last year. We relate the poor output to its product line: about 90% of the passenger cars it made were old Lada models in the economy price segment, which has seen increased competition from Chinese, Ukrainian, Russian and Romanian producers. Unless the company updates its product mix and finds financial partners to facilitate purchases, we believe the company’s competitiveness on both the domestic and Russian car markets will deteriorate further in 2012.