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Demand remains robust; was it excise or structural?
Demand momentum continues to positively surprise…
February has seen volume growth maintenance. This could partially be
attributed to structural demand and primarily to sales in anticipation of
excise hike. The growth has been robust at 22.1% YoY and ~4.3% MoM
(on a higher base) at ~1.52 million units reaching 1.58 million units. The
growth in sales in CY11 despite across the board price hikes in the
automobile sector could be an early indicator of pricing power in the
industry and growing income strength. However, this would only be
confirmed post the sales in March 2011 when externalities for sales like
pre-Budget buying would cease to exist. The volume growth of the
industry has been ~27.4% with the passenger car (PV) segment growing
24.1%, commercial vehicle (CV) segment growing the fastest at 32.1%
and the largest segment, two-wheelers growing at 27.7% on a YTD basis.
The demand scene would be a key deliverable for the industry. It has
been provided uplift with status quo being maintained in excise structure.
However, an increase in input prices would be a big deterrent.
Status quo on excise duty big boost sentimentally…
Against market expectations, the Union Budget proved to be positive for
the automotive sector as it maintained the status quo on the excise duty
structure and provided sops for the green initiative “electric vehicles”. The
unchanged excise structure would provide headroom for OEMs to arrest a
declining margin trend amid higher input prices and also not dampen the
structural demand scene prevalent in the domestic market.
Commodity rise main concern, Japanese disaster provides short term relief
Commodity prices, led by steel, aluminium and plastics prices, have
increased ~5-15% YoY. The price of natural rubber has seen the steepest
hike and kept on rising in this fiscal touching a peak of | 235 (~58%
higher YoY). This steep rise has somewhat corrected due to the recent
untoward developments in Japan. This has caused prices to crash to ~|
185 level. This decline in commodities due to the Japanese tsunami is a
temporary phenomenon spiralling to probable demand decline
anticipations in the short-term. However, we believe that overall this
calamity would be a negative for global commodity prices and demand
due to reconstruction would be immense.
Industry Outlook
The outlook towards volume growth of the sector is positive. We expect
CAGR of volume growth to range between 18% and 20% in FY10-12E. On
the index performance basis, the BSE Auto index has outperformed the
BSE Sensex with YoY return of 14.6% as compared to 6% during the
same period. The demand side has remained robust in CY11 and is an
early signal for our belief towards the structural nature of automotive
demand similar to what was witnessed in China post CY03. The
confirmation of the same would arrive post March 2011, which would be
free from any externalities pushing demand higher. The major spoilers for
the sector remain steep commodity hikes and unfavourable currency
volatility that could cause a serious concern to the whole industry as
profitability could see an erosion. Among our I-direct auto coverage, we
remain bullish on frontline OEM stocks like Tata Motors and Maruti
Suzuki. Among our ancillary coverage stocks, we find favourable valuation
and business growth perspectives in Bharat Forge and Exide Industries.
Latest events/news
• The Union Budget proved to be a welcome support for the
automotive sector with sops for green initiatives and electric
vehicles. However, most importantly, the unchanged excise duty
structure was a positive step in maintaining the demand
momentum and providing higher headroom for manufacturers
• The events in Japan have had a negative effect on Japanese car
manufacturers plans in India. Honda has delayed its scheduled
launch for Brio (earlier scheduled in March). Even Toyota has
delayed the inauguration of its new plant in Bangalore, which is
supposed to produce the recently launched sedan Etios
• Mahindra & Mahindra has completed the acquisition of a majority
stake in South Korea's SsangYong Motor Co (SMC) on March 15,
2011. M&M, which emerged as the preferred bidder for
SsangYong in August 2010, will now hold a 70% stake in SMC.
For this, it has shelled out $463 million. SMC will invest ~| 960
crore in CY11 on product development and brand building. The
firm will increase investment in product development by 70% YoY
in CY11 to ~ | 800 crore
• Maruti Suzuki India Ltd has initiated plans to start a new
manufacturing facility in Rohtak with 6 lakh initial capacity raising
the total capacity by FY13E to 2 million vehicles. The plant would
require ~| 1000 crore and would sprawl across 200 acres of land
• Tata Motors has launched the new Tata Indica eV2. Tata Indica
eV2 is built on the Tata Indica platform and would be the most fuel
efficient car at 25 kmpl. Tata Indica eV2 is priced between | 3.95
lakh and | 4.77 lakh(ex-showroom price in Delhi)
• Swedish car-maker Volvo Car Corp has said that it expects India to
become its third largest market in Asia after China and Japan by
2016. Volvo, at present, has a minimal impact in terms of volumes
but expects to grow gradually in the medium to long term.
Two–three wheeler industry
The two-wheeler industry has seen robust growth throughout the year
with a stupendous 22.9% MoM jump and 27.7% YTD growth. Market
leader Hero Honda along with Bajaj Auto has recorded above 20%
volume growth even on an increasing base. TVS Motors also witnessed a
rebound post January 2011 with ~23.2% YoY growth. Scooter sales
growth rates continue to remain the highest in the two-wheeler segment
though all other segments are also expected to grow with the onset of the
marriage season across India in CY11.
Market share movement
According to data released by Society of Indian Automobile
Manufacturers (SIAM), the domestic market share of two and threewheeler players is as below for February 2011.
Hero Honda Motors (HERHON)
• Hero Honda Motors (HHL), the market leader in the two-wheeler
segment, has maintained the strong start to CY11. HHL has
continued to maintain its domestic market share with a marginal
improvement of 10 bps each (MoM basis) in the motorcycle and
total two-wheeler segment (refer Exhibit 1 and 3). HHL promoters
declared the price of purchase of Honda Motors’ stake at | 739.97
per share (~50% discount to market price)
• The company registered volumes of 4,72,055 units with a
stupendous 23.5% YoY jump on a large base. On an MoM basis, a
marginal ~1% jump was witnessed as buyers advanced
purchases in anticipation of excise hikes
• The scooter segment continued to gain market share with
volumes of 34,929 units, growth of 50.5% YoY and 66.1% YTD.
HHL remains focused on the scooter segment that is reflected in
the fact that it has gained 210 bps in the domestic market to
16.3% while market leader HMSI has lost 760 bps
Bajaj Auto (BAAUTO)
• Bajaj Auto (BAL) has seen a healthy volume up-tick in February
2011 mainly driven by higher sales in the sportier segment of
Pulsar and Discover. On the domestic front, its market share
remains at 26.8% in the motorcycle segment (refer exhibits 1 & 3)
• Total volumes for the month were at 326,874 units. This was a
strong 21.7% YoY growth and 4.2% jump on a MoM basis as
higher three-wheeler sales supported volume growth along with
motorcycle segment
• At a segmental level, the motorcycle segment continued its strong
growth in the premium segment through the brands of Pulsar and
Discover (accounting for ~67% of total sales) and volumes have
grown 22.2% YoY. However, on the domestic front, motorcycle
volumes grew only 16.7% YoY while exports jumped 38.4% for
the same. Exports volume contribution to overall sales is at 31.3%
lower than YTD contribution of 32.2%
• The three-wheeler segment witnessed growth of ~18.4% YoY,
5.9% MoM with stronger domestic market growth of ~26.7% at
19,296 units. The slower export offtake is a worry as its
contribution to three-wheeler volumes has slipped to ~53% for
February 2011 (down 600 bps YoY)
TVS Motors (TVSSUZ)
• TVS Motors saw a smooth rebound in volume growth post the
lacklustre January 2011 with MoM growth across the motorcycle
and moped segments
• Motorcycle volumes jumped to 71,642 units, a 5.8% MoM and
13.0% YoY increase as Jive and Wego volumes and acceptance in
the market is improving
• Scooter sales have been lagging with a 1.0% decline at 40,335
units emphasising higher competition and improving position of
Hero Honda in this segment (refer exhibit 4)
• The moped segment, which was a dampener in the previous
month, has led the improvement with 7.0% MoM jump at 57,011
units as demand in the southern region improved. This continues
to remain the bread and butter region for TVS Motors
• Exports have surpassed all expectations and jumped by 23.3%
MoM and 25.6% YoY to all-time high level of 24,036 units. The
contribution of exports to overall sales similarly jumped to 13.9%
from 12.1% in the previous month. The rise in sales can be
attributed to improvement in sales from Indonesian and Malaysian
regions, which saw seasonality driven declines in Q3FY11
Four-wheeler Industry
Commercial vehicle growth continues to be strongest as on a YoY basis it
grew 32.1% YTD. With stronger budgetary push we could witness a pickup in infra and capital goods-linked activities in CY11, in turn, helping on
the volumes visibility front for the segment. The passenger car market
continues to be strong with strong volume growth of 24.1% YTD. Input
prices remain an overhang with rising prices and with the impending
Japanese crisis, raw material prices could further rise on a longer term.
On the positive side, however, OEMs have some degree of leverage on
pricing as demand continues to grow, thus supporting likely margin
declines.
Market share movement
According to SIAM, the domestic market share for passenger vehicles
(PV) and CVs in February 2011 has been as follows.
Maruti Suzuki India (MARUTI)
• Maruti Suzuki India (MSIL) has welcomed CY11 with another 1
lakh plus sales number for the domestic market. The sales volume
for the market leader is reflective of the strong nature of demand.
We remain cautiously optimistic on its structural nature. We
expect India to enter an auto sales growth trajectory similar to
China (post 2003) post FY12-13E
• Domestic sales again surpassed the 1 lakh volume barrier with
101,387 units (20.0% YoY, 1.1% MoM jump). They continue to
maintain overall market share at above 45% levels (February
2010). The competitive nature of the A2 segment and PV, in
general, has not impacted MSIL’s volumes as earlier anticipated.
On the contrary, the market share and volumes have
outperformed peers. The recent quake in Japan may lead to some
slowdown in production. However, strong inventory build-up in
March 2011 would compensate for any loss of production
• Growth was seen in the bread and butter segment A2 (Alto, Swift,
Wagon-R, Zen, A-star, Ritz) (72,090 units, a 19.4% YoY jump) and
C segment (Omni, Versa and Eeco) (13,536 units, a 26.9% YoY
increase).The Alto family with K-10 introduction continues to post
volumes of ~33100 units followed by Wagon-R at ~14,000 odd
units. In the A2 segment, Ritz has also started to show stronger
volumes at ~5,900 odd units. In the high yielding A3 segment,
overall volumes have jumped to 13,024 (9.2% MoM, 27.0% YoY
increase) led by ~9500 units for Swift Dzire. In the C-segment
both Omni and Eeco continue to do well with volumes at ~7700,
~5700 odd units respectively.
• Export segment volumes have seen MoM up-tick at 10,102 units, a
~1.7% increase. This was a change from a consistent decline for a
couple of months. The export contribution, as per our
understanding, would normalise at ~8.5-9.0% of overall sales
volumes
Tata Motors (TELCO)
• Tata Motors reported strongest monthly sales in both the
domestic market as well overall global sales. Domestic sales were
driven by stronger passenger vehicle performance and global
sales were supported by higher Jaguar & Land Rover (JLR) sales
volumes
• Overall, global sales came in at 102,411 units, a 14.1% YoY and
~3.5% MoM increase. Along with the standalone sales of 77,543
units, JLR sales came in at 21,653 units with 6.3% MoM, 25.9%
YoY increase as Land Rover volumes jumped 32.6% YoY to
18,440 units.
• On a segmental level in standalone operations, CV demand picked
up slightly with M&HCV volumes increase of ~7.0% MoM. With an
unchanged excise duty structure, we expect volume growth to be
strong as infrastructure picks up in FY12. The LCV segment has
seen a mild slowdown with volumes of 23,498 units and a decline
of 1.2% MoM as “Ace’ continues to face capacity constraints and
increased competition from M&M in the LCV portfolio
• Passenger vehicles (inclusive of UVs) sales for the month
continued their robust growth in various product sales with overall
volumes at 31,909 units (18.3% YoY and 5.6% MoM jump). PV
sales continued to be boosted by Indica and Indigo sales (10,044
units and 8,966 units respectively).Tata Nano has continued on the
resurgence track post the disappointment in volumes in
November 2010 with volumes of 8262 units (up ~16% MoM). The
management remains confident on witnessing volumes of Nano
of ~10,000 odd units, going forward
• Exports have been slow with a decline of 9.0% MoM with
contribution towards total sales dropping to 5.8% as compared to
7.2% of YTD in FY11
Mahindra and Mahindra (MAHMAH)
• Mahindra and Mahindra (M&M) has seen a minor slowdown in
volumes in all segments from UV to tractors as compared to the
previous month
• The utility vehicle segment inclusive of four-wheeler pickups grew
to 26,281 units, a 32.3% YoY jump and 8.0% MoM decline as the
LCV segment has seen moderation across the industry. Its market
share has slid 40 bps from ~31% in January 2011 in the complete
LCV segment to 30.6% in February 2011. Volumes in the UV
segment have been maintained due to the performance of the
Scorpio, which sold ~4,000 odd units in February 2011.The sales
of Xylo (~2,200 odd units) have been depressing as Tata Sumo
after languishing in the past year has overtaken it in volume terms.
The recently integrated company SsangYong has reported sales
of 6,682 units (up 49.2% YoY) for February 2011
• Exports have been erratic with automotive exports declining
33.3% MoM as the company reported volumes of 1,411 units for
the month
• The farm equipment segment (FES), which has been the standout
in terms of performance, also witnessed a slower month with a
7.1% MoM decline at 19,041 units. Domestic volumes fell ~6.7%
MoM at 18,134 units. On the exports side, the volumes were at
1,069 units (10.8% MoM decline). The higher impetus from the
government towards the rural segment with the increase in farm
credit allocation by | 1 lakh crore would be a positive in improving
further offtake in the agri-related segment
Ashok Leyland (ASHLEY)
• Ashok Leyland (ALL) witnessed robust growth as CV sales picked
up post the moderation in volumes in December 2010 and
January 2011. Overall sales volumes were at 9,800 units, reflecting
growth of 27.1% MoM and 24.5% YoY
• The M&HCV passenger segment has been on a downward slope
with flattish 1.9% MoM increase at 2,136 units mainly due to the
dependence on the JNNURM scheme. This has been exhausted
and, going forward, would not stimulate growth. ALL has
continued to do well in the goods segment ably supported by new
product launches in the U-trucks category. The MHCV goods
segment has seen a 36.6% MoM, 31.4% YoY growth at 7,601
units, thereby providing comfort with commercial order booking
expected to increase as infrastructure pick-up in FY12 is expected
to improve
• Exports have been on a downward slope with sales reaching 816
units (down 1.8% MoM). Export contribution to total sales
declined to 8.3%, lower from 10.8% in the previous month
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Demand remains robust; was it excise or structural?
Demand momentum continues to positively surprise…
February has seen volume growth maintenance. This could partially be
attributed to structural demand and primarily to sales in anticipation of
excise hike. The growth has been robust at 22.1% YoY and ~4.3% MoM
(on a higher base) at ~1.52 million units reaching 1.58 million units. The
growth in sales in CY11 despite across the board price hikes in the
automobile sector could be an early indicator of pricing power in the
industry and growing income strength. However, this would only be
confirmed post the sales in March 2011 when externalities for sales like
pre-Budget buying would cease to exist. The volume growth of the
industry has been ~27.4% with the passenger car (PV) segment growing
24.1%, commercial vehicle (CV) segment growing the fastest at 32.1%
and the largest segment, two-wheelers growing at 27.7% on a YTD basis.
The demand scene would be a key deliverable for the industry. It has
been provided uplift with status quo being maintained in excise structure.
However, an increase in input prices would be a big deterrent.
Status quo on excise duty big boost sentimentally…
Against market expectations, the Union Budget proved to be positive for
the automotive sector as it maintained the status quo on the excise duty
structure and provided sops for the green initiative “electric vehicles”. The
unchanged excise structure would provide headroom for OEMs to arrest a
declining margin trend amid higher input prices and also not dampen the
structural demand scene prevalent in the domestic market.
Commodity rise main concern, Japanese disaster provides short term relief
Commodity prices, led by steel, aluminium and plastics prices, have
increased ~5-15% YoY. The price of natural rubber has seen the steepest
hike and kept on rising in this fiscal touching a peak of | 235 (~58%
higher YoY). This steep rise has somewhat corrected due to the recent
untoward developments in Japan. This has caused prices to crash to ~|
185 level. This decline in commodities due to the Japanese tsunami is a
temporary phenomenon spiralling to probable demand decline
anticipations in the short-term. However, we believe that overall this
calamity would be a negative for global commodity prices and demand
due to reconstruction would be immense.
Industry Outlook
The outlook towards volume growth of the sector is positive. We expect
CAGR of volume growth to range between 18% and 20% in FY10-12E. On
the index performance basis, the BSE Auto index has outperformed the
BSE Sensex with YoY return of 14.6% as compared to 6% during the
same period. The demand side has remained robust in CY11 and is an
early signal for our belief towards the structural nature of automotive
demand similar to what was witnessed in China post CY03. The
confirmation of the same would arrive post March 2011, which would be
free from any externalities pushing demand higher. The major spoilers for
the sector remain steep commodity hikes and unfavourable currency
volatility that could cause a serious concern to the whole industry as
profitability could see an erosion. Among our I-direct auto coverage, we
remain bullish on frontline OEM stocks like Tata Motors and Maruti
Suzuki. Among our ancillary coverage stocks, we find favourable valuation
and business growth perspectives in Bharat Forge and Exide Industries.
Latest events/news
• The Union Budget proved to be a welcome support for the
automotive sector with sops for green initiatives and electric
vehicles. However, most importantly, the unchanged excise duty
structure was a positive step in maintaining the demand
momentum and providing higher headroom for manufacturers
• The events in Japan have had a negative effect on Japanese car
manufacturers plans in India. Honda has delayed its scheduled
launch for Brio (earlier scheduled in March). Even Toyota has
delayed the inauguration of its new plant in Bangalore, which is
supposed to produce the recently launched sedan Etios
• Mahindra & Mahindra has completed the acquisition of a majority
stake in South Korea's SsangYong Motor Co (SMC) on March 15,
2011. M&M, which emerged as the preferred bidder for
SsangYong in August 2010, will now hold a 70% stake in SMC.
For this, it has shelled out $463 million. SMC will invest ~| 960
crore in CY11 on product development and brand building. The
firm will increase investment in product development by 70% YoY
in CY11 to ~ | 800 crore
• Maruti Suzuki India Ltd has initiated plans to start a new
manufacturing facility in Rohtak with 6 lakh initial capacity raising
the total capacity by FY13E to 2 million vehicles. The plant would
require ~| 1000 crore and would sprawl across 200 acres of land
• Tata Motors has launched the new Tata Indica eV2. Tata Indica
eV2 is built on the Tata Indica platform and would be the most fuel
efficient car at 25 kmpl. Tata Indica eV2 is priced between | 3.95
lakh and | 4.77 lakh(ex-showroom price in Delhi)
• Swedish car-maker Volvo Car Corp has said that it expects India to
become its third largest market in Asia after China and Japan by
2016. Volvo, at present, has a minimal impact in terms of volumes
but expects to grow gradually in the medium to long term.
Two–three wheeler industry
The two-wheeler industry has seen robust growth throughout the year
with a stupendous 22.9% MoM jump and 27.7% YTD growth. Market
leader Hero Honda along with Bajaj Auto has recorded above 20%
volume growth even on an increasing base. TVS Motors also witnessed a
rebound post January 2011 with ~23.2% YoY growth. Scooter sales
growth rates continue to remain the highest in the two-wheeler segment
though all other segments are also expected to grow with the onset of the
marriage season across India in CY11.
Market share movement
According to data released by Society of Indian Automobile
Manufacturers (SIAM), the domestic market share of two and threewheeler players is as below for February 2011.
Hero Honda Motors (HERHON)
• Hero Honda Motors (HHL), the market leader in the two-wheeler
segment, has maintained the strong start to CY11. HHL has
continued to maintain its domestic market share with a marginal
improvement of 10 bps each (MoM basis) in the motorcycle and
total two-wheeler segment (refer Exhibit 1 and 3). HHL promoters
declared the price of purchase of Honda Motors’ stake at | 739.97
per share (~50% discount to market price)
• The company registered volumes of 4,72,055 units with a
stupendous 23.5% YoY jump on a large base. On an MoM basis, a
marginal ~1% jump was witnessed as buyers advanced
purchases in anticipation of excise hikes
• The scooter segment continued to gain market share with
volumes of 34,929 units, growth of 50.5% YoY and 66.1% YTD.
HHL remains focused on the scooter segment that is reflected in
the fact that it has gained 210 bps in the domestic market to
16.3% while market leader HMSI has lost 760 bps
Bajaj Auto (BAAUTO)
• Bajaj Auto (BAL) has seen a healthy volume up-tick in February
2011 mainly driven by higher sales in the sportier segment of
Pulsar and Discover. On the domestic front, its market share
remains at 26.8% in the motorcycle segment (refer exhibits 1 & 3)
• Total volumes for the month were at 326,874 units. This was a
strong 21.7% YoY growth and 4.2% jump on a MoM basis as
higher three-wheeler sales supported volume growth along with
motorcycle segment
• At a segmental level, the motorcycle segment continued its strong
growth in the premium segment through the brands of Pulsar and
Discover (accounting for ~67% of total sales) and volumes have
grown 22.2% YoY. However, on the domestic front, motorcycle
volumes grew only 16.7% YoY while exports jumped 38.4% for
the same. Exports volume contribution to overall sales is at 31.3%
lower than YTD contribution of 32.2%
• The three-wheeler segment witnessed growth of ~18.4% YoY,
5.9% MoM with stronger domestic market growth of ~26.7% at
19,296 units. The slower export offtake is a worry as its
contribution to three-wheeler volumes has slipped to ~53% for
February 2011 (down 600 bps YoY)
TVS Motors (TVSSUZ)
• TVS Motors saw a smooth rebound in volume growth post the
lacklustre January 2011 with MoM growth across the motorcycle
and moped segments
• Motorcycle volumes jumped to 71,642 units, a 5.8% MoM and
13.0% YoY increase as Jive and Wego volumes and acceptance in
the market is improving
• Scooter sales have been lagging with a 1.0% decline at 40,335
units emphasising higher competition and improving position of
Hero Honda in this segment (refer exhibit 4)
• The moped segment, which was a dampener in the previous
month, has led the improvement with 7.0% MoM jump at 57,011
units as demand in the southern region improved. This continues
to remain the bread and butter region for TVS Motors
• Exports have surpassed all expectations and jumped by 23.3%
MoM and 25.6% YoY to all-time high level of 24,036 units. The
contribution of exports to overall sales similarly jumped to 13.9%
from 12.1% in the previous month. The rise in sales can be
attributed to improvement in sales from Indonesian and Malaysian
regions, which saw seasonality driven declines in Q3FY11
Four-wheeler Industry
Commercial vehicle growth continues to be strongest as on a YoY basis it
grew 32.1% YTD. With stronger budgetary push we could witness a pickup in infra and capital goods-linked activities in CY11, in turn, helping on
the volumes visibility front for the segment. The passenger car market
continues to be strong with strong volume growth of 24.1% YTD. Input
prices remain an overhang with rising prices and with the impending
Japanese crisis, raw material prices could further rise on a longer term.
On the positive side, however, OEMs have some degree of leverage on
pricing as demand continues to grow, thus supporting likely margin
declines.
Market share movement
According to SIAM, the domestic market share for passenger vehicles
(PV) and CVs in February 2011 has been as follows.
Maruti Suzuki India (MARUTI)
• Maruti Suzuki India (MSIL) has welcomed CY11 with another 1
lakh plus sales number for the domestic market. The sales volume
for the market leader is reflective of the strong nature of demand.
We remain cautiously optimistic on its structural nature. We
expect India to enter an auto sales growth trajectory similar to
China (post 2003) post FY12-13E
• Domestic sales again surpassed the 1 lakh volume barrier with
101,387 units (20.0% YoY, 1.1% MoM jump). They continue to
maintain overall market share at above 45% levels (February
2010). The competitive nature of the A2 segment and PV, in
general, has not impacted MSIL’s volumes as earlier anticipated.
On the contrary, the market share and volumes have
outperformed peers. The recent quake in Japan may lead to some
slowdown in production. However, strong inventory build-up in
March 2011 would compensate for any loss of production
• Growth was seen in the bread and butter segment A2 (Alto, Swift,
Wagon-R, Zen, A-star, Ritz) (72,090 units, a 19.4% YoY jump) and
C segment (Omni, Versa and Eeco) (13,536 units, a 26.9% YoY
increase).The Alto family with K-10 introduction continues to post
volumes of ~33100 units followed by Wagon-R at ~14,000 odd
units. In the A2 segment, Ritz has also started to show stronger
volumes at ~5,900 odd units. In the high yielding A3 segment,
overall volumes have jumped to 13,024 (9.2% MoM, 27.0% YoY
increase) led by ~9500 units for Swift Dzire. In the C-segment
both Omni and Eeco continue to do well with volumes at ~7700,
~5700 odd units respectively.
• Export segment volumes have seen MoM up-tick at 10,102 units, a
~1.7% increase. This was a change from a consistent decline for a
couple of months. The export contribution, as per our
understanding, would normalise at ~8.5-9.0% of overall sales
volumes
Tata Motors (TELCO)
• Tata Motors reported strongest monthly sales in both the
domestic market as well overall global sales. Domestic sales were
driven by stronger passenger vehicle performance and global
sales were supported by higher Jaguar & Land Rover (JLR) sales
volumes
• Overall, global sales came in at 102,411 units, a 14.1% YoY and
~3.5% MoM increase. Along with the standalone sales of 77,543
units, JLR sales came in at 21,653 units with 6.3% MoM, 25.9%
YoY increase as Land Rover volumes jumped 32.6% YoY to
18,440 units.
• On a segmental level in standalone operations, CV demand picked
up slightly with M&HCV volumes increase of ~7.0% MoM. With an
unchanged excise duty structure, we expect volume growth to be
strong as infrastructure picks up in FY12. The LCV segment has
seen a mild slowdown with volumes of 23,498 units and a decline
of 1.2% MoM as “Ace’ continues to face capacity constraints and
increased competition from M&M in the LCV portfolio
• Passenger vehicles (inclusive of UVs) sales for the month
continued their robust growth in various product sales with overall
volumes at 31,909 units (18.3% YoY and 5.6% MoM jump). PV
sales continued to be boosted by Indica and Indigo sales (10,044
units and 8,966 units respectively).Tata Nano has continued on the
resurgence track post the disappointment in volumes in
November 2010 with volumes of 8262 units (up ~16% MoM). The
management remains confident on witnessing volumes of Nano
of ~10,000 odd units, going forward
• Exports have been slow with a decline of 9.0% MoM with
contribution towards total sales dropping to 5.8% as compared to
7.2% of YTD in FY11
Mahindra and Mahindra (MAHMAH)
• Mahindra and Mahindra (M&M) has seen a minor slowdown in
volumes in all segments from UV to tractors as compared to the
previous month
• The utility vehicle segment inclusive of four-wheeler pickups grew
to 26,281 units, a 32.3% YoY jump and 8.0% MoM decline as the
LCV segment has seen moderation across the industry. Its market
share has slid 40 bps from ~31% in January 2011 in the complete
LCV segment to 30.6% in February 2011. Volumes in the UV
segment have been maintained due to the performance of the
Scorpio, which sold ~4,000 odd units in February 2011.The sales
of Xylo (~2,200 odd units) have been depressing as Tata Sumo
after languishing in the past year has overtaken it in volume terms.
The recently integrated company SsangYong has reported sales
of 6,682 units (up 49.2% YoY) for February 2011
• Exports have been erratic with automotive exports declining
33.3% MoM as the company reported volumes of 1,411 units for
the month
• The farm equipment segment (FES), which has been the standout
in terms of performance, also witnessed a slower month with a
7.1% MoM decline at 19,041 units. Domestic volumes fell ~6.7%
MoM at 18,134 units. On the exports side, the volumes were at
1,069 units (10.8% MoM decline). The higher impetus from the
government towards the rural segment with the increase in farm
credit allocation by | 1 lakh crore would be a positive in improving
further offtake in the agri-related segment
Ashok Leyland (ASHLEY)
• Ashok Leyland (ALL) witnessed robust growth as CV sales picked
up post the moderation in volumes in December 2010 and
January 2011. Overall sales volumes were at 9,800 units, reflecting
growth of 27.1% MoM and 24.5% YoY
• The M&HCV passenger segment has been on a downward slope
with flattish 1.9% MoM increase at 2,136 units mainly due to the
dependence on the JNNURM scheme. This has been exhausted
and, going forward, would not stimulate growth. ALL has
continued to do well in the goods segment ably supported by new
product launches in the U-trucks category. The MHCV goods
segment has seen a 36.6% MoM, 31.4% YoY growth at 7,601
units, thereby providing comfort with commercial order booking
expected to increase as infrastructure pick-up in FY12 is expected
to improve
• Exports have been on a downward slope with sales reaching 816
units (down 1.8% MoM). Export contribution to total sales
declined to 8.3%, lower from 10.8% in the previous month
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