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'Milestones' - India Automobile
Sales Tracker
Dec'10 - Sales growth momentum sustains
• Automotive sales growth during December was healthy. Passenger car
sales were up +24% yoy (+26% YTD), two-wheeler sales +29% y/y
(+29% YTD) and commercial vehicle sales +31% yoy (+38% YTD).
Sales of CV's have been driven by light trucks (+41% yoy), while
M/HCV sales moderated to +22% yoy (vs.+44% YTD).
• Key data points on market share: While the industry leaders have
lost market share to competition yoy - Hero Honda (-570bp) in the
motorcycle segment, Maruti (-110bp) in the passenger car segment and
Tata Motors (-290bp) in the commercial vehicle segment - incremental
mom trends indicate that they have partially regained share.
• US, China drive global luxury growth: Luxury brands BMW,
Mercedes-Benz, and Audi saw worldwide sales increase by 14%, 11%
and 12%, respectively, y/y in December. BMW, Mercedes-Benz and
Audi finished the year with a sales increase of 14%, 15% and 15%, y/y
respectively. All three brands cited higher sales in the US and China
for the performance. Sales growth in Europe was muted in comparison.
• Hero Honda split over the month: Hero & Honda ended their two
decade joint venture. We believe that while the transition for Hero
Honda will be gradual (royalty rates to remain inline, Honda brand
name can be used till 2014); the local group will face challenges
relating to a) R&D scale up & incremental costs therein, b) branding
challenges in new export markets, and c) rising competition in the local
markets, which could entail higher brand spends.
• Sector outlook: The auto sector (-6% mom) underperformed the
broader Sensex (-2%) during the month. While volumes are likely to
grow in double digits, headwinds are building up given rising interest
rates and higher crude prices. We believe that competitive intensity is
likely to intensify. In this backdrop, we prefer companies that have a
defendable niche, given that growth rates and competitive landscape
will vary going forward. We reiterate our OW stance on Mahindra
Western Europe/ USA monthly passenger car sales &
Global Luxury Segment Sales Wrap
December US LV SAAR came in at 12.6MM, showing continued improvement over
November’s 12.3MM and JPMe/Bloomberg consensus of 12.3MM. According to our
US auto analyst, Himanshu Patel, most of the sequential SAAR rise was driven by retail
despite adverse weather conditions across several regions. Q4’s exit rate of ~12.3MM
average coupled with year-end industry inventories that are 12 days below normal for this
time of year suggest 2011 NA production will only modestly lag SAAR growth.
Western European SAAR sequentially improves: Based on the five major W.
European countries that have reported so far, the passenger car SAAR is tracking at
13.5MM, -9.6% y/y (vs. JPMe of 13.4MM,). Germany saw a 0.14MM m/m sequential
SAAR increase, while France saw a +0.08MM m/m.
US, China drive global luxury growth: Luxury brands BMW, Mercedes-Benz, and
Audi saw worldwide sales increase by 14%, 11% and 12%, respectively, y/y in
December. All three brands cite higher sales in the US and China for the
performance. BMW reported a 9% y/y decline in Europe December sales and
Mercedes reported a 10% decline in their Western European December sales.
The Manheim Used Luxury Vehicle Value Index increased by 1% m/m in December
2010.
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