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Automobiles
June month sales volume
For June month, sales volume record diverse trend as Mahindra led the pack with
32% yoy growth followed by Hero Honda (20%), whereas Maruti and Tata Motors
record drop of 9% and 2% respectively. Incumbent car makers are worst affected
by macro headwinds and increased competition.
! In June month also, sales volume performance continued to favour rural market leaders like
Mahindra and Hero Honda, as they led in yoy growth.
! But urban market product like car continue to reel under pressure for both Maruti and Tata
Motor car division. Inspite of increased incentives, sales volume growth was weak.
! The recently increased diesel prices coupled with monsoon period may impact sentiments for
CV's in the short-term.
! In an environment of rising petrol prices, finance rates, our Buys in the sector are Hero
Honda, Mahindra and Tata Motor in that order. We remain cautious and maintain a Hold
rating on Maruti, Ashok Leyland and Sell on Bajaj Auto.
Monthly company sales volume details
! Mahindra - total sales volume record 9.6% mom and 31.7% yoy growth to 55,794 vehicles.
Tractors record 39.8% yoy and 20.1% mom to 21,552 vehicles. June is seasonally strong
period for tractors. Larger automotive division noticed 28% yoy and 3% mom growth driven by
new products in 4-wheeler pick-up segments like Maxximo passenger vehicle.
! Hero Honda - Continued to record strong 20.1% yoy and 2.4% mom growth in lean month like
June. The performance is 12% better than our expectation. Dealer inventory marginally inchup, but remain much below specified norm of 3 weeks of sales. Considering bunching-up of
festival season in September and October months, we feel company will remain in strong
inventory build-up phase till August.
! Maruti Suzuki - Records a sharp drop of 8.8% yoy and 22.8% mom to 80,298 vehicles. The
sales volume is 11% below our revised expectation for the Manesar plant worker strike
shutdown for 10.5 days. If adjusted for around 10,000 diesel car sales volume loss from
strike(as cutomers were on wait list), then volume growth could have been +2.5% yoy. Our
channel checks highlight that - dealer profitability in June was the worst in recent months(due
to mix change). Inspite of incentives going-up sharply in June month, retail inventory is flat to
higher than May end.
! Tata Motor - total sales volume dip 2% yoy to 66,358 vehicles primarily due to weak
passenger car sales. The volume is 5% below expectation. Domestic CV division remained
strong with 13% yoy growth, driven by 18% growth in LCV and 6% growth in M&HCV. But
domestic car division dip 21% yoy. Exports are flat . Interms of mom, the improvement seen
across segments is encouraging.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Automobiles
June month sales volume
For June month, sales volume record diverse trend as Mahindra led the pack with
32% yoy growth followed by Hero Honda (20%), whereas Maruti and Tata Motors
record drop of 9% and 2% respectively. Incumbent car makers are worst affected
by macro headwinds and increased competition.
! In June month also, sales volume performance continued to favour rural market leaders like
Mahindra and Hero Honda, as they led in yoy growth.
! But urban market product like car continue to reel under pressure for both Maruti and Tata
Motor car division. Inspite of increased incentives, sales volume growth was weak.
! The recently increased diesel prices coupled with monsoon period may impact sentiments for
CV's in the short-term.
! In an environment of rising petrol prices, finance rates, our Buys in the sector are Hero
Honda, Mahindra and Tata Motor in that order. We remain cautious and maintain a Hold
rating on Maruti, Ashok Leyland and Sell on Bajaj Auto.
Monthly company sales volume details
! Mahindra - total sales volume record 9.6% mom and 31.7% yoy growth to 55,794 vehicles.
Tractors record 39.8% yoy and 20.1% mom to 21,552 vehicles. June is seasonally strong
period for tractors. Larger automotive division noticed 28% yoy and 3% mom growth driven by
new products in 4-wheeler pick-up segments like Maxximo passenger vehicle.
! Hero Honda - Continued to record strong 20.1% yoy and 2.4% mom growth in lean month like
June. The performance is 12% better than our expectation. Dealer inventory marginally inchup, but remain much below specified norm of 3 weeks of sales. Considering bunching-up of
festival season in September and October months, we feel company will remain in strong
inventory build-up phase till August.
! Maruti Suzuki - Records a sharp drop of 8.8% yoy and 22.8% mom to 80,298 vehicles. The
sales volume is 11% below our revised expectation for the Manesar plant worker strike
shutdown for 10.5 days. If adjusted for around 10,000 diesel car sales volume loss from
strike(as cutomers were on wait list), then volume growth could have been +2.5% yoy. Our
channel checks highlight that - dealer profitability in June was the worst in recent months(due
to mix change). Inspite of incentives going-up sharply in June month, retail inventory is flat to
higher than May end.
! Tata Motor - total sales volume dip 2% yoy to 66,358 vehicles primarily due to weak
passenger car sales. The volume is 5% below expectation. Domestic CV division remained
strong with 13% yoy growth, driven by 18% growth in LCV and 6% growth in M&HCV. But
domestic car division dip 21% yoy. Exports are flat . Interms of mom, the improvement seen
across segments is encouraging.
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