Earlier this month I wrote about the Russian auto market, particularly how high oil prices have engendered a boom there while simultaneously decimating auto sales in the US market.

There are, of course, multiple ironies here, not the least of which is the fact that the very US brands that are collapsing in their homeland are some of the hottest models in Russia. GM’s Chevrolet brand saw a 59% increase in units sold in Russia for 1Q08 vs. 1Q07. Ford saw slower growth—only a 6% increase quarter over quarter— though its Focus is the best-selling model in Russia.

However, neither GM nor Ford offer much exposure to the Russia market. Russia accounts for less than 4% of sales for GM. And the Russian market isn’t even counted on Ford’s financial statements.

On a side note, even if Russia accounted for 25% of both brands’ sales, I still wouldn’t touch them with a 10-foot pole. GM’s stock recently hit a 53-year low after posting an 18% decrease in June auto sales. The company is bankrupt, carrying an unsustainable debt load that includes an ever-worsening portfolio of subprime mortgages. Even Wall Street—predictably several years late—has begun downgrading the company.

Strangely, Ford, whose business isn’t faring much better—June sales fell 28%—somehow managed to avoid the downgrades that hammered GM. Fitch Ratings says it will review the company over the next six weeks. I can spend two minutes looking at Ford’s 10-K and tell you it hasn’t made a cent selling cars for more than five years. Doesn’t look like there’s much to review there.

Back to Russia.

In my last essay on this subject, I mentioned that I would look around for a play on the Russian auto market. I’ve found one, but I want to be very clear: I am in no way recommending this stock. It trades on the pink sheets and rarely, if ever, has any daily volume in the US. Again, do not run out and buy this stock. I only mention it for your review.

The company I’m talking about is Finnish tire manufacturer Nokian Tyres (NKRKF.PK).

Nokian specializes in truck or SUV tires suitable for heavy snow and winter driving. As such it’s perfectly suited for the Russia auto-market and its brutal winters. All told Nokian is the market leader, controlling 31% of the premium winter tires market in the country—more than double its closest competitor. Russia accounts for 31% of the company’s sales.

Sales have nearly doubled since 2004. Income has more than doubled over the same time period. And Russia is the primary growth driver here—sales for the country grew 64% in 1Q08. In fact, business is growing so fast that the company’s Russian production lines actually run around the clock—three shifts—344 days a year.

Nokian sells its tires in Russia via a network of 132 outlets in 88 cities. It plans to increase this number to more than 300 by the end of 2009. And with Russia car sales expected to grow by 16% per year for the next four years, there’s little sign of a let up.

Again, I’m not recommending you buy this company. But if you’re interested in learning more about the Russian auto market this is a great place to start. The company’s website is: http://www.nokiantyres.com/products.

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Graham Summers

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