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Passenger car sales: Maruti, the leader, disappoints
As we had indicated in our car dealer survey, published on March 29, 2011,
passenger car sales (wholesale) slowed down in April. Maruti Suzuki (MSIL)
reported modest sales of 97,155 units (up 4% Y-o-Y, down 20% M-o-M).
Hyundai’s sales, at 52,058 units, were flat (up 0.1% Y-o-Y). Even Tata Motors
(TTMT) reported sluggish car sales, down 41% Y-o-Y and 33% M-o-M.
While domestic sales is struggling to grow, overseas sales of Indian subsidiaries
like Ssangyong has continued its upward trend. Ssangyong has reported sales of
10,343 units (up 47% Y-o-Y, 1.6% M-o-M). Further, we expect strong growth to
continue for Tata Motors’ JLR division.
Two wheelers: Hero Honda leads the pack
Hero Honda reported highest ever monthly sales of 517k units (up 39% Y-o-Y)
mainly on strong rural demand whereas Bajaj Auto focused on exports since it
had missed shipment in March. Its exports sales grew 40% Y-o-Y, while domestic
sales recorded 5% Y-o-Y growth, leading to total sales of 367k units. For TVS
Motors, sales were ~5% below the consensus, with total sales up 13% Y-o-Y to
168k units.
Commercial vehicle sales: MHCV slowing down
Tata Motors’ (TTMT) M&HCV sales, at 13,936 units (up 6% Y-o-Y, down 40% M-o-
M), have shown initial signs of moderation. Even after considering seasonality,
sequential sales decline has been steeper. TTMT’s LCV sales continued to post
healthy growth of 28% Y-o-Y, mainly led by ACE. We expect similar disappointing
numbers from Ashok Leyland (our estimates are 7,000 units).
Tractor sales: Below par sequentially, but reversible
Mahindra & Mahindra (M&M) reported 14% Y-o-Y growth and 7% M-o-M decline at
18,530 units. Sequentially, sales were a tad below expectations; historically,
tractors sales show high volatility. Management is hopeful of growth bouncing
back May onwards (Q1 is a seasonally strong quarter for tractor demand).
Outlook: Challenging
In line with our expectations, automobile sales have already begun to slow down.
We expect cars and CVs to be the worst affected, since their sales are highly
dependent on bank funding and susceptible to rise in interest rates and inflation.
We continue to prefer companies with high rural exposure and exports content.
Our top picks for the sector are M&M and TTMT.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Passenger car sales: Maruti, the leader, disappoints
As we had indicated in our car dealer survey, published on March 29, 2011,
passenger car sales (wholesale) slowed down in April. Maruti Suzuki (MSIL)
reported modest sales of 97,155 units (up 4% Y-o-Y, down 20% M-o-M).
Hyundai’s sales, at 52,058 units, were flat (up 0.1% Y-o-Y). Even Tata Motors
(TTMT) reported sluggish car sales, down 41% Y-o-Y and 33% M-o-M.
While domestic sales is struggling to grow, overseas sales of Indian subsidiaries
like Ssangyong has continued its upward trend. Ssangyong has reported sales of
10,343 units (up 47% Y-o-Y, 1.6% M-o-M). Further, we expect strong growth to
continue for Tata Motors’ JLR division.
Two wheelers: Hero Honda leads the pack
Hero Honda reported highest ever monthly sales of 517k units (up 39% Y-o-Y)
mainly on strong rural demand whereas Bajaj Auto focused on exports since it
had missed shipment in March. Its exports sales grew 40% Y-o-Y, while domestic
sales recorded 5% Y-o-Y growth, leading to total sales of 367k units. For TVS
Motors, sales were ~5% below the consensus, with total sales up 13% Y-o-Y to
168k units.
Commercial vehicle sales: MHCV slowing down
Tata Motors’ (TTMT) M&HCV sales, at 13,936 units (up 6% Y-o-Y, down 40% M-o-
M), have shown initial signs of moderation. Even after considering seasonality,
sequential sales decline has been steeper. TTMT’s LCV sales continued to post
healthy growth of 28% Y-o-Y, mainly led by ACE. We expect similar disappointing
numbers from Ashok Leyland (our estimates are 7,000 units).
Tractor sales: Below par sequentially, but reversible
Mahindra & Mahindra (M&M) reported 14% Y-o-Y growth and 7% M-o-M decline at
18,530 units. Sequentially, sales were a tad below expectations; historically,
tractors sales show high volatility. Management is hopeful of growth bouncing
back May onwards (Q1 is a seasonally strong quarter for tractor demand).
Outlook: Challenging
In line with our expectations, automobile sales have already begun to slow down.
We expect cars and CVs to be the worst affected, since their sales are highly
dependent on bank funding and susceptible to rise in interest rates and inflation.
We continue to prefer companies with high rural exposure and exports content.
Our top picks for the sector are M&M and TTMT.
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