Kremenchuk Wheel produces trial lot of wheels for Renault

A Kremenchuk Wheel (KKOL: N/R) representative said last week that the company produced a trial lot of automobile wheels for Renault in Russia, which will undergo tests for one month and then serial production of the wheels is planned to be launched. Inna Perepelytsya: Kremenchuk Wheel did not disclose any other parameters of the potential deal or its partner, but we believe the company will deliver the trial lot to AvtoVAZ (Russia’s largest passenger car producer, which Renault bought a 25%+1 stake in this February). If these wheels are approved by AvtoVAZ, we expect that Kremenchuk would start delivering wheels no earlier than in 2009. We estimate that this deal could bring in an additional 5% to sales (~USD 5 mln) in 2009, and up to 10% in 2010-2011 as Renault car production grows at AvtoVAZ plants. AvtoVAZ is currently working out its development plan for 2009-2012 with Renault, and depending on the actual figures, Kremenchuk Wheel could be in line for even more orders than our back-of-the-envelope estimates.