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Automobiles
India
Momentum slowing down. Auto volumes in May 2011 were a mixed bag indicating a
slowdown in passenger car volumes while utility vehicle and Hero Honda two-wheeler
volumes remained quite strong. Tata Motors’ domestic MHCV volumes picked up
slightly (12% yoy) in May. Passenger car volumes picked up sequentially in May as
companies increased discounts to lift consumer sentiment. We see near-term pressure
on volumes to continue in passenger cars till the festive season.
Hero Honda continues its good run in May as well
Hero Honda reported a 15% yoy volume growth in May 2011 boosted by the marriage season but
volume declined by 3% mom. TVS Motors reported 18% yoy growth in volumes driven by strong
growth in exports, scooter and moped sales. Domestic motorcycle volume growth was flat yoy for
TVS Motors.
Maruti volumes pick up in May driven by discounts push
Maruti reported a 4% yoy growth in domestic volumes while exports volumes declined by 13% yoy
in May 2011. Retail volumes which declined by 40% mom in April increased in May, according to
the management, driven by (1) strong growth in rural sales and (2) increase in discounts. A3
segment volumes continued to show a strong growth of 25% yoy growth driven by SX4 diesel and
Dzire sales. Hyundai Motor India also reported a 15% yoy growth in domestic volumes, due to
strong response to i20 and newly launched Hyundai Verna. General Motors, Tata Motors, Honda
Siel, Ford India all reported a decline in sales while Volkswagen and Toyota reported a strong
growth in volumes.
Mahindra reported a healthy 14% yoy growth in utility vehicle volumes and 10% yoy growth in
tractor volumes. The Maxximo (including pick-ups and Gio) segment grew by 28% yoy due to low
base. Domestic tractor volumes were up 8% yoy while tractor exports increased by 45% on a low
base.
Medium/heavy commercial vehicle volumes of Tata Motors pick up slightly in May
Tata Motors’ domestic commercial vehicle volumes were up 19% yoy driven by a 24% yoy growth
in LCV volumes and a muted 12% yoy growth in MHCV volumes. Tata Motors’ domestic car sales
declined by 9% yoy having lost market share to Hyundai Motors, in our view, while utility vehicle
volumes were up 15% yoy in May 2011. Indica volumes declined by 35% yoy and Indigo volumes
were lower by 35% yoy, offset by a strong growth in Nano sales.
Automotive volume growth likely to remain weak in the near term
We believe passenger car, two-wheeler and truck volumes are likely to remain muted over the near
term on concerns of a sharp rise in interest rates, a seasonally weak quarter, expectations of further
increase in fuel prices and slowing industrial production. Passenger car and commercial vehicle
volumes have moderated much more sharply than two-wheelers and utility vehicles. We expect
passenger car volume growth to pick up in coming months but expect discounts to increase during
the period to lift customer sentiment. We maintain Maruti as our top pick in the sector on
reasonable valuations (11X PE on our FY2013E consolidated EPS).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Automobiles
India
Momentum slowing down. Auto volumes in May 2011 were a mixed bag indicating a
slowdown in passenger car volumes while utility vehicle and Hero Honda two-wheeler
volumes remained quite strong. Tata Motors’ domestic MHCV volumes picked up
slightly (12% yoy) in May. Passenger car volumes picked up sequentially in May as
companies increased discounts to lift consumer sentiment. We see near-term pressure
on volumes to continue in passenger cars till the festive season.
Hero Honda continues its good run in May as well
Hero Honda reported a 15% yoy volume growth in May 2011 boosted by the marriage season but
volume declined by 3% mom. TVS Motors reported 18% yoy growth in volumes driven by strong
growth in exports, scooter and moped sales. Domestic motorcycle volume growth was flat yoy for
TVS Motors.
Maruti volumes pick up in May driven by discounts push
Maruti reported a 4% yoy growth in domestic volumes while exports volumes declined by 13% yoy
in May 2011. Retail volumes which declined by 40% mom in April increased in May, according to
the management, driven by (1) strong growth in rural sales and (2) increase in discounts. A3
segment volumes continued to show a strong growth of 25% yoy growth driven by SX4 diesel and
Dzire sales. Hyundai Motor India also reported a 15% yoy growth in domestic volumes, due to
strong response to i20 and newly launched Hyundai Verna. General Motors, Tata Motors, Honda
Siel, Ford India all reported a decline in sales while Volkswagen and Toyota reported a strong
growth in volumes.
Mahindra reported a healthy 14% yoy growth in utility vehicle volumes and 10% yoy growth in
tractor volumes. The Maxximo (including pick-ups and Gio) segment grew by 28% yoy due to low
base. Domestic tractor volumes were up 8% yoy while tractor exports increased by 45% on a low
base.
Medium/heavy commercial vehicle volumes of Tata Motors pick up slightly in May
Tata Motors’ domestic commercial vehicle volumes were up 19% yoy driven by a 24% yoy growth
in LCV volumes and a muted 12% yoy growth in MHCV volumes. Tata Motors’ domestic car sales
declined by 9% yoy having lost market share to Hyundai Motors, in our view, while utility vehicle
volumes were up 15% yoy in May 2011. Indica volumes declined by 35% yoy and Indigo volumes
were lower by 35% yoy, offset by a strong growth in Nano sales.
Automotive volume growth likely to remain weak in the near term
We believe passenger car, two-wheeler and truck volumes are likely to remain muted over the near
term on concerns of a sharp rise in interest rates, a seasonally weak quarter, expectations of further
increase in fuel prices and slowing industrial production. Passenger car and commercial vehicle
volumes have moderated much more sharply than two-wheelers and utility vehicles. We expect
passenger car volume growth to pick up in coming months but expect discounts to increase during
the period to lift customer sentiment. We maintain Maruti as our top pick in the sector on
reasonable valuations (11X PE on our FY2013E consolidated EPS).
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