Financial Analysis of Risks of New Product Launch on the Market

Today’s changing economic environment and intense market competition causes the raise of new products launches. Companies have to create and develop new products to hold and maintain its market share, satisfy variable customer demand. Launch of a new product is always connected with high financial risks for the companies, which in the paper determined as probability to get the negative value of project’s NPV. In case of a brand new product launch there is no reliable data about forecasted project’s variables such as product’s sales and reve-nue, to apply a standard risk-assessment models as sensitivity analyses, VaR and etc. In the paper we develop the new algorithm of risk assessment for Russian automobile market and test it on a new ŠKODA Auto company model, Kodiaq. We suggest first to conduct econometrics analysis to assess dependence of car sales and key market factors, as well as to reveal parame-ter’s distributive law. As long as we have all necessary data, we build a project’s mathemati-cal model to count the risk by Monte Carlo simulation. In the research we suggest the algorithm of financial risk assessment of a new car model launch, however the model may be applied to other types of products on various markets with its specific determinants and features.