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Strong growth in Dec
In Dec-10, India’s car sales grew 31% YoY, 2Ws grew 31% YoY while
CVs grew 27% YoY. We expect growth to moderate in coming months as
the high base of early-2010 kicks in and expect growth of 20%, 12% and
10% for cars, 2Ws and CVs in FY12. In cars, Maruti continues to defend
market share above 50%. In CVs, Tata Motors has gained share in trucks
from Ashok Leyland. In 2Ws, Hero Honda has gained share in bikes and
scooters. We enter 2011 with a cautious stance on the sector due to
slowing growth and rising competition and recommend a selective
investment approach. Our top picks are M&M, Tata Motors and ALL.
Cars & UVs: Strong growth continues; Maruti defends 50%+ share
‰ India’s car sales rose 31% YoY in Dec-10. YTD growth now stands at 34%.
‰ Maruti continues to defend share above 50%; combined market share of the 4 new
small car entrants has stabilized. Tata gained some market share in Dec-10.
‰ UV sales grew 24% YoY in Dec while M&M gained some more market share.
CVs: Growth moderating; Tata gaining share in trucks
‰ Truck sales rose 29% YoY in Dec-10; YTD growth now stands at 48%.
‰ On a trend-basis, truck industry growth has been slowing down in recent months.
We expect a further slowdown to 10% in FY12 post two years of 30%+ growth.
‰ Tata has gained share in trucks as well as LCVs in Dec-10.
2Ws/3Ws: Hero Honda gains market share
‰ 2W sales grew 31% YoY in Dec-10; YTD growth now stands at 28%; scooters
continue to grow much faster than motorcycles.
‰ Hero Honda has gained share in both motorcycles and scooters in Dec-10.
‰ Passenger 3W industry growth is moderating while Bajaj has lost some share.
Be selective in 2011
‰ Post 2 years of strong performance, we enter 2011 on a cautious note for India
Autos given slowing growth, rising interest rates and higher competition.
‰ We recommend a selective approach while investing in the sector. Our top picks are
M&M (BUY, TP Rs855), Tata Motors (BUY, TP Rs1410) and Ashok Leyland (BUY, TP
Rs80).
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