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Car growth still in negative territory
In Aug-11, India’s car sales declined 8% YoY, 2Ws grew 16% YoY while CVs
grew 23% YoY. 2Ws and goods LCVs are the best performing segments with
YTD growth rates of 16% and 31% respectively. Our revised FY12 growth
estimates are 5%, 14% and 5% for cars, 2Ws and M&HCVs respectively.
Based on YTD performance, we see downside to our FY12 volumes for Maruti
but see some upside to our M&M volumes. Festival season (Oct) sales will be
key for the sector though early signs are negative. M&M is our top pick in the
sector. We remain negative on Maruti, Tata Motors, Hero Motocorp and Bajaj.
Cars & UVs: Car volumes declined 8% YoY; UVs doing better
q Domestic car sales declined 8% YoY in Aug-11. YTD growth now stands at 1%. We
now expect car industry volumes to grow 5% YoY in FY12 (vs. 10% earlier).
q Maruti’s market share was up 3.5ppts MoM in Aug but is still low at 46% as sales
have been impacted by the ongoing labour issues at the Manesar plant.
q TTMT lost 1ppt MoM market share while new small car entrants lost 3.6ppts share.
q UV sales grew 13% YoY – 2nd month of double digit growth. YTD growth is 10%.
CVs: Truck growth has recovered to double digits; goods LCVs still robust
q Truck sales rose a strong 17% YoY in Aug. YTD growth now stands at 10% versus
our FY12 estimate of 5% growth.
q Goods LCV growth was robust at 36% YoY; YTD growth rate is at 31% - highest
among all auto segments.
q TTMT gained 2.1ppts MoM market share in trucks (from ALL and Eicher) and
3.1ppts MoM market share in goods LCVs (from M&M).
2Ws/3Ws: 2W growth is holding up better but 3Ws have slowed down
q 2W sales grew at 16% YoY in Aug-11. Scooters grew a strong 25% YoY as HMSI
has started ramping up its new Rajasthan plant; motorcycle growth was at 15%.
q Hero MotoCorp (HMCL) lost 1.5ppts MoM market share in motorcycles (to Bajaj)
and 2.3ppts MoM market share (to HMSI).
q Passenger 3W sales were down 13% YoY in Aug but we expect volumes to improve
in the near-term with new permits opening up in Karnataka. Market share of Bajaj
was almost stable, but Piaggio lost 80bps MoM market share (to M&M)
M&M remains our top pick in the sector; 2Ws expensively valued
q Based on our revised FY12 industry growth forecasts, we see upside to our FY12
volume estimates for M&M but downside to our numbers for Maruti.
q We believe that 2W stocks are building excessive optimism and are ignoring cyclical
risks to 2W growth in the near-term and structural risks to both 2W growth and
competition from HMSI in the medium to long term.
q M&M remains our top pick given relatively better industry growth; minimal
incremental competition and new product tailwinds
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Car growth still in negative territory
In Aug-11, India’s car sales declined 8% YoY, 2Ws grew 16% YoY while CVs
grew 23% YoY. 2Ws and goods LCVs are the best performing segments with
YTD growth rates of 16% and 31% respectively. Our revised FY12 growth
estimates are 5%, 14% and 5% for cars, 2Ws and M&HCVs respectively.
Based on YTD performance, we see downside to our FY12 volumes for Maruti
but see some upside to our M&M volumes. Festival season (Oct) sales will be
key for the sector though early signs are negative. M&M is our top pick in the
sector. We remain negative on Maruti, Tata Motors, Hero Motocorp and Bajaj.
Cars & UVs: Car volumes declined 8% YoY; UVs doing better
q Domestic car sales declined 8% YoY in Aug-11. YTD growth now stands at 1%. We
now expect car industry volumes to grow 5% YoY in FY12 (vs. 10% earlier).
q Maruti’s market share was up 3.5ppts MoM in Aug but is still low at 46% as sales
have been impacted by the ongoing labour issues at the Manesar plant.
q TTMT lost 1ppt MoM market share while new small car entrants lost 3.6ppts share.
q UV sales grew 13% YoY – 2nd month of double digit growth. YTD growth is 10%.
CVs: Truck growth has recovered to double digits; goods LCVs still robust
q Truck sales rose a strong 17% YoY in Aug. YTD growth now stands at 10% versus
our FY12 estimate of 5% growth.
q Goods LCV growth was robust at 36% YoY; YTD growth rate is at 31% - highest
among all auto segments.
q TTMT gained 2.1ppts MoM market share in trucks (from ALL and Eicher) and
3.1ppts MoM market share in goods LCVs (from M&M).
2Ws/3Ws: 2W growth is holding up better but 3Ws have slowed down
q 2W sales grew at 16% YoY in Aug-11. Scooters grew a strong 25% YoY as HMSI
has started ramping up its new Rajasthan plant; motorcycle growth was at 15%.
q Hero MotoCorp (HMCL) lost 1.5ppts MoM market share in motorcycles (to Bajaj)
and 2.3ppts MoM market share (to HMSI).
q Passenger 3W sales were down 13% YoY in Aug but we expect volumes to improve
in the near-term with new permits opening up in Karnataka. Market share of Bajaj
was almost stable, but Piaggio lost 80bps MoM market share (to M&M)
M&M remains our top pick in the sector; 2Ws expensively valued
q Based on our revised FY12 industry growth forecasts, we see upside to our FY12
volume estimates for M&M but downside to our numbers for Maruti.
q We believe that 2W stocks are building excessive optimism and are ignoring cyclical
risks to 2W growth in the near-term and structural risks to both 2W growth and
competition from HMSI in the medium to long term.
q M&M remains our top pick given relatively better industry growth; minimal
incremental competition and new product tailwinds
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