1.12.2004

SOK Group Analysed the Situation at IzhAvto OJSC

As of 1 December, the stock of finished products at the IzhAvto OJSC storage facilities is 16,000 motor vehicles.

The causes of such overstocking have been investigated by the SOK Group management and found to be due to the recurring seasonal slack in sales and oversights on the part of the IzhAvto OJSC management. Certain personnel and organizational measures have been put in place to remedy the situation and boost sales:

• the prices have been frozen till 1 March 2005;
• promotion actions have been launched;
• a special credit programme has been launched jointly with Promek-Bank to promote sale of 5,000 cars in the 4^th quarter 2004.

In addition, the SOK Group management has been closely monitoring the commitments of IzhAvto OJSC towards banks, creditors, suppliers and investors, such commitments being totally guaranteed by the SOK Group.

Energetic efforts are under way to prepare the IzhAvto OJSC facilities for introduction of CKD procedures to assemble KIA cars. The partnership between the SOK Group and KIA Motors Corporation is going from strength to strength and, first of all, in the area of RF sales of KIA cars.

The SOK Group management devotes a lot of attention to a programme for expansion of IzhAvto OJSC through 2010, which is expected to be adopted in the 1^st half of 2005.