India automobiles October sales – Festivities Galore:: Macquarie

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India automobiles
October sales – Festivities Galore
Event
 Automobile majors Maruti Suzuki, Tata Motors, Hero Honda, M&M, and TVS
Motors reported monthly sales numbers for October 2010. Most companies
reported a robust set of sales numbers as they were preparing to meet the large
festive demand with de-bottlenecked operations and improved supply chains.



Impact
 Maruti Suzuki – better than estimates: Maruti Suzuki recorded total sales of
119k units, its highest so far. For the first time it broke the mark of 100k in the
domestic market by clocking sales of 107k units in the month. Sales of the
prime ‘A2’ segment grew by 51% while ‘C’ segment sales saw the increase of
92% YoY supported by strong demand for its new mini van 'Eeco'.

 Tata Motors – steady growth in volumes: Tata Motors’ total sales stood at
64,757 units for the month, up 21% YoY. Both light and medium & heavy
commercial vehicles continued their good show with YoY growth rates of 14%
and 11% respectively. The utility segment grew by the highest rate of 38%;
while the passenger car segment also grew by a healthy 20%.
 M&M – robust volumes: M&M’s total sales grew 32% YoY to 58,776 units, as
supply constraints were resolved. The company’s auto sales increased 34%
YoY and the tractor segment’s sales grew by a robust 29%. M&M’s four-wheel
pick-up sales increased 53% YoY on the back of a strong response to its
recently launched product, ‘Maximo’. Logan continued to see an incremental
improvement and clocked sales of 1,079 units in the domestic market.
 Hero Honda – bounces back: Hero Honda’s total despatches for the month
stood at a record 505,553 units, up 43% YoY. The company has made a
comeback after growing at single-digit rates and losing significant market
share in the last few months. It has recently launched the special edition and
refurbished versions of its best selling bikes to cash in on the festive season.
 TVS Motors – strong growth across segments: TVS Motors’ domestic
sales grew 47% YoY to 174k units, while exports increased 49% to ~18k units
for the month. The company’s motorcycle sales grew 49% YoY, while scooter
sales grew 58% YoY, respectively.
Outlook
 A normal monsoon season, improving consumer sentiment and the overall
recovery of the economy should benefit auto sales, although a higher base
and increasing interest rates may dampen sales growth rates in the second
half of the fiscal. We believe commercial vehicle manufacturers like Tata
Motors, Ashok Leyland and farm vehicle producers like M&M will perform
better than others on the back of increasing industrial production, high
agriculture output and a pick-up in the investment cycle.