OREANDA-NEWS. March 01, 2010. The carmaker’s inventory of unsold cars shrank by 2.2x y-o-y towards the end of February, which has allowed the company to bring unsold stocks into better alignment with sales and free up around RUB 14.5 billion in working capital.

The Avtovaz press service reported on February 27 that its inventory of ready-made cars had contracted by 2.2x from a year earlier to 55,000 units. The data released is comprised of the cars stockpiled at the plant’s warehouses, dealers and those on the way to sales points.

We view the news as moderately positive. In 2009, the car producer managed to bring its car stocks in line with sales volumes and thus free up part of its working capital. In 2009, Avtovaz saw car sales drop 44% to 349,500 units; therefore, inventory reduction looks like a logical step. According to our estimates, with the average producer price of RUB 220,000 per vehicle, the reduction in the inventory by 66,000 units has permitted the carmaker to release RUB 14.5 billion in working capital.