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Surging two wheelers, falling four wheelers…
Sluggish demand as consumer faces multiple hurdles…
August volumes remained under pressure as demand softened on
account of macro headwinds. The automobile sector is facing a
challenging scenario of dearer fuel prices and soaring interest rates. The
industry registered a figure of ~1.67 million units in August 2011, up 3.7%
on an MoM basis. In contrast to the passenger car segment, the two
wheeler space continued to march on. Volumes remained robust in the
two-wheeler category due to strong demand from Tier-II cities and rural
areas coupled with lesser dependency on vehicle financing. We believe
that although consumer demand is more structural today as compared to
previous years, volume growth would remain muted (till H1FY12) as the
interest rate cycle peaks out. For FY12E, we maintain our volume
estimates of ~13% for the industry. With the festive season commencing,
sales are likely to improve with additional discounts being offered by
companies to woo customers. Volume growth of the industry in August
2011 has been 15.3% YoY, with the passenger car (PV) segments lagging
behind (up 0.4% YoY). The commercial vehicle (CV) segment continued
its robust growth resulting in volume increase of 21.1% YoY driven by the
LCV space, up 34.5% YoY. Two-wheeler segment growth continued to
beat industry growth, growing at ~18.7% YoY on a high base.
All eyes on RBI’s mid term policy review…
The Reserve Bank of India will take a call on a further hike in interest rates
on September 16, in its mid-term policy review. The inflation figures have
to be closely monitored as softening inflation would indicate an early
peaking out of the interest rate cycle. We have an in-house view of 25 bps
hike in the interest rates. The RBI has already hiked interest rates 11 times
since March 2010 and its lagged impact is clearly visible on the demand
front as well as both the CV and PV space. This decline in demand is
expected to sustain if the RBI continues to focus on curbing inflation at the
expense of growth by undertaking further rate hikes.
Commodity prices hold up amid global concerns…
Global commodity prices have held up despite global concerns. Although
commodity prices witnessed a mild correction in several commodities
ranging from oil to metals, the correction was not as severe. Prices
ranging from steel to aluminium have witnessed a cooling off to the tune
of a couple of percentage points. Also, one commodity that remains
critical to the auto sector and has slowed down to a slight extent is natural
rubber that has come off its peak of ~| 235 and is at ~| 205 (down 13%).
According to our estimates, global commodity prices will soften in the
near to medium term as the global growth outlook seems to taper off
from earlier estimates.
Industry outlook
We maintain our optimistic view towards volume growth in the sector. We
expect an industry wide volume growth of ~13% for FY12E. On an index
performance basis, the BSE Auto index has outperformed the BSE Sensex
with YoY return of -7.4% as compared to -14.3% during the same period.
The demand, which remained buoyant in FY11, has shown signs of
slowing down due to fuel price hikes and higher interest rates. Among our
ICICIdirect.com auto coverage, we remain bullish on frontline OEM stocks
like Tata Motors. In the ancillary coverage, we find favourable valuation in
Bharat Forge and Exide Industries
News & views
• French car-maker PSA Peugeot Citroen plans to create 30,000
direct and indirect jobs in Gujarat after it starts production in 2014.
The company signed an agreement with the Gujarat government
to manufacture 1.65 lakh cars per annum from the Sanand facility
proposed to cover over 600 acres
• Japanese car maker Toyota has announced it will launch the
diesel variants of its small car Liva and sedan Etios in India shortly.
The company, which is present in India through a joint venture
with the Kirloskar Group, had introduced the petrol versions of
Etios last year while Liva was rolled out in June this year
• Maruti Suzuki India has launched the all-new Swift with prices
starting from | 4.22 lakh (ex showroom Delhi). The petrol version
is priced at | 4.22 lakh going up to | 5.53 lakh while the diesel
variant starts at | 5.17 lakh and rising up to | 6.38 lakh
• US-based off-road vehicle-maker Polaris Industries has forayed
into the Indian market with plans to set up an assembly facility
within the next five years as it looks to clock revenues of up to
US$400 million from the country by then. The company, which
has started its operations in the country through a wholly-owned
subsidiary, is looking to set up an R&D centre and introduce its
high-end motorcycles in India in the next three to five years
• Maruti has asked its workers to sign a good conduct bond.
However, with most workers refusing to sign the bond, the
carmaker then recruited 125 ITI trainees and brought in engineers
and supervisors from its Gurgaon plant to resume production.
Production at the current rate equates to just over 10% of regular
work at Manesar. Maruti Suzuki now has about 800 workers
involved in production in Manesar. The plant can produce 1,200
units of the Swift, A-Star and SX4 per day at full capacity
Two–three wheeler industry
The two-wheeler industry held its fort and sustained its volume
momentum as it clocked a robust 17.7% YTD growth. The industry saw
sturdy sales across players despite macro headwinds. Market leader Hero
MotoCorp was back to its 5 lakh unit run rate clocking an impressive
figure of 503,654. Bajaj Auto has also witnessed a robust 16.2% YoY
growth. The two-wheeler segment has continued to outperform the PV
segment backed by strong rural demand. However, the coming few
months would be an important indicator towards the demand scenario.
Market share movement
According to the data released by the Society of Indian Automobile
Manufacturers (SIAM), the domestic market share of two and threewheeler players is as below for August 2011.
Hero MotoCorp (HERHON)
w
• Hero MotoCorp, market leader in the two-wheeler segment,
clocked sales of over 5 lakh units after failing to achieve its 0.5
million units run rate during the previous month
• During the month, the company unveiled its new brand identity
after parting ways with its JV partner Honda Motor Co, Japan.
HMCL domestic market share in the motorcycle segment
remained flat (down ~50 bps MoM) (refer Exhibit: 1, 3)
• The company reported volumes of 503,654 units posting 18.6%
YoY and 2.6% MoM growth. The management is confident of
surpassing sales of over 6 million units in FY12 and its
performance is on track with YTD sales up 21% on a YoY basis
• The scooter segment saw volumes increase 16.1% YoY but fell
13.3% on an MoM basis clocking 32,172 units. The company
plans to increase its focus on the scooter segment with capacity
expansion of ~65% in FY12 to touch ~57,500 units per month
Bajaj Auto (BAAUTO)
• Bajaj Auto posted strong volume numbers boosted by export
growth (up 40.2% YoY). On the domestic front, its market share
improved to 25.7% in the motorcycle segment as domestic sales
picked up ~11.2 % on an MoM basis
• Total volumes for the month were at 382,739 units reflecting a
16.2% YoY growth. In the two-wheeler space, Pulsar and Discover
brands (accounting for ~65% of total sales) continued to be the
volume driver. The domestic contribution to motorcycle sales rose
~341 bps MoM to 67% in August 2011
• The three-wheeler segment for Bajaj Auto maintained its growth
trajectory. It witnessed 11.2% YoY growth at 44,685 units. Exports
contribution in August remained flat on a sequential basis at
59.8% from 61.6% in July
• Overall exports advanced to 138,225 units, a jump of ~40.2%
YoY. The export contribution to total sales in August 2011
declined to 36.1% from 39.6% in July as domestic sales witnessed
a smart improvement
TVS Motors (TVSSUZ)
• TVS Motors’ sales continued its growth momentum with strong
sales across all its segments viz. motorcycles, scooters and
mopeds
• Overall sales figures came in at 194,898 units, which reflected a
16.6% YoY and 3.4% MoM growth. Motorcycle volumes rose to
77,726 units, an increase of 16.8% on a YoY basis
• Scooter sales witnessed an MoM rise of ~4.5% and YoY jump of
~27.7% at 52,253 units. In the two-wheeler segment, the
automatic scooter space has witnessed good traction with an
overall 19.4% YTD volume growth for the segment at 988,585
units
• The mopeds segment performed satisfactorily with 15.9% YoY
jump to 64,919 units. The sales were primarily driven by robust
retail sales in the southern region from the rural segment
• The export segment sustained its northward drive with 57.6% YoY
growth and was up 9% MoM clocking 29,984 units. The
contribution of exports continues to remain higher YoY with YTD
contribution at 14.8%, up from 11.8% in FY11
Four-wheeler industry
The commercial vehicle segment witnessed growth of ~21.1% YoY,
which outperformed the total industry growth. The M&HCV segment grew
at 6.2% YoY while the LCV segment surged 34.5% YoY. However, the
segment continues to face challenges on the interest rates front and
would receive a boost only if the infrastructure activity and capital goods
segment witnesses a stronger pick-up in H2FY12E. The passenger car
volumes remained flat (up 0.4% YoY) with sluggish demand in the A2
segment by Maruti. Escalating input prices continue to remain an
overhang mirroring rising commodity prices. On the positive side,
however, with the advent of the festive season, demand is expected to
pick up from current levels.
Market share movement
According to SIAM, the domestic market share for passenger vehicles
(PV) and CVs in August 2011 has been as follows.
Maruti Suzuki India (MARUTI)
• Maruti Suzuki India (MSIL) witnessed a volume pick-up on an
MoM basis primarily driven by the export segment. The volumes
came in at 91,442 units (down 12.7% YoY) due to labour unrest at
the Manesar plant and demand slowdown in the domestic market
• Domestic sales were at 77,086 units (up 15.9% MoM but down
16.8% YoY). Maruti’s domestic market share remained flat on an
MoM basis at 40.3%in the PV segment. SIAM has pruned down
growth forecasts for passenger cars to 10-12% from the earlier 16-
18% in FY12E. In the immediate future, we believe sales volumes
would remain under pressure until the interest rate cycle peaks
out by H1FY12E
• The company has reached the normal production levels of Swift
despite a large number of permanent workers still remaining away
from work at the Manesar plant. The company further brought
down its dependence on permanent workers who are refusing to
sign a good conduct bond and remaining absent from work at the
Manesar plant. It brought in 50 more ITI trained and experienced
workers at the Manesar plant. With this, the total strength at the
Manesar plant has now reached 1100 people. At this level of daily
production, the company will be able to produce 12,500 units of
Swift in a month. Although the strike is continuing, the production
impact is less compared to last time
• The bread and butter segment, the “A2 segment” (Alto, Swift,
Wagon-R, Zen, A-star, Ritz), sold 52,139 units, growth of 14.6%
MoM. It remains the most interest rate sensitive segment in the PV
space. Also, the C segment (Omni, Versa and Eeco) performed
sluggishly at 12,500 units (down 6.6% MoM)
• The high yielding A3 segment saw volume expansion to the tune
of 9,749 units (up 83.1% MoM but down 7% YoY)
Tata Motors (TELCO)
• Tata Motors witnessed a fall in PV sales in the domestic market
(6.7% decline MoM) as Nano and Indigo volumes got dampened
with rising interest rates at 1,202 and 5,100 units, respectively.
Nano volumes were down on account of maintenance shutdown
and inventory realignment. Increased competition in the segment
is also taking its toll on sales
• At a segmental level, the M&HCV segment registered 5.8% YoY
and 3.6% MoM growth. The LCV segment continues to be the
shining beacon registering 27.1% YoY and 2.4% MoM growth
• Passenger vehicle volumes declined 40.9% YoY and 6.7% MoM.
The UV segment registered growth of 14.2% YoY and 5.3% MoM.
With the arrival of the festive season, demand in the PV space is
likely to improve
• The sales of the Indica range of vehicles were up ~23% MoM at
7,206 units while sales of the Indigo range of vehicles remained
flat at 5,100 units. Similarly, Nano sales declined by 63% MoM to
1,202 units. Nano sales have again started to flounder and
reached their lowest level since November 2010 in which they
touched 509 units. Exports contribution to sales declined to 6.6%
(down ~120 bps on a YoY basis). August 2011 saw exports slide
18.5% YoY and 24.7% MoM at 4,204 units
Mahindra and Mahindra (MAHMAH)
• Mahindra and Mahindra (M&M) reported healthy volume growth in
comparison to its peers in both the automotive as well as FES
segment. The total volumes were up 26.8% YoY to 53,687 units
• The utility vehicle segment, inclusive of four-wheeler pick-ups,
rose to 26,517 units, a 29.2% YoY jump. Volumes in the UV
segment observed a strong performance with higher sales of its
Maximmo and Gio. Sales of Bolero and Scorpio were ~6550 and
~4,400 odd units in August 2011. The sales of Xylo (~2,150 odd
units) have seen an improvement with its competitor the Tata
Sumo witnessing a decline in sales
• Automotive exports touched 1,928 units (up 18.4% YoY but down
16.5% MoM) with overall sales being higher from the Asian region
• The farm equipment segment (FES) has performed well in
comparison to other peers like Escorts and TAFE. It witnessed a
healthy 19.1% YoY rise at 16,003 units. Domestic volumes rose
20.9% YoY at 15,059 units. On the exports front, volumes were
flattish at 944 units. We believe the higher impetus from the
government towards the rural segment along with normal
monsoons would be a positive and help in improving a further
offtake in the agri-related segment with expected demand growth
of 13-15% in FY12E
Ashok Leyland (ASHLEY)
• Ashok Leyland’s (ALL) volumes saw a dip of 7.9% on a sequential
basis and declined 3.5% YoY posting total sales of 7,218 units. CV
sales were impacted on account of high interest rates and fuel
costs rise
• The M&HCV passenger segment declined on an MoM basis (down
~10% MoM) to 2,041 units. The volume driver continues to be the
goods segment clocking 5,095 units (down 2.6% YoY). This rise in
the goods segment has allayed some fears over commercial
orders growth even under such a capex-unfriendly environment
• Exports remained flat in August 2011 with sales touching 1,050
units (down 0.9% QoQ). The export contribution to total sales in
August 2011 rose to 14.5% from 13.5% in the previous month
mainly due to a lacklustre performance of the M&HCV segment in
the domestic market
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Surging two wheelers, falling four wheelers…
Sluggish demand as consumer faces multiple hurdles…
August volumes remained under pressure as demand softened on
account of macro headwinds. The automobile sector is facing a
challenging scenario of dearer fuel prices and soaring interest rates. The
industry registered a figure of ~1.67 million units in August 2011, up 3.7%
on an MoM basis. In contrast to the passenger car segment, the two
wheeler space continued to march on. Volumes remained robust in the
two-wheeler category due to strong demand from Tier-II cities and rural
areas coupled with lesser dependency on vehicle financing. We believe
that although consumer demand is more structural today as compared to
previous years, volume growth would remain muted (till H1FY12) as the
interest rate cycle peaks out. For FY12E, we maintain our volume
estimates of ~13% for the industry. With the festive season commencing,
sales are likely to improve with additional discounts being offered by
companies to woo customers. Volume growth of the industry in August
2011 has been 15.3% YoY, with the passenger car (PV) segments lagging
behind (up 0.4% YoY). The commercial vehicle (CV) segment continued
its robust growth resulting in volume increase of 21.1% YoY driven by the
LCV space, up 34.5% YoY. Two-wheeler segment growth continued to
beat industry growth, growing at ~18.7% YoY on a high base.
All eyes on RBI’s mid term policy review…
The Reserve Bank of India will take a call on a further hike in interest rates
on September 16, in its mid-term policy review. The inflation figures have
to be closely monitored as softening inflation would indicate an early
peaking out of the interest rate cycle. We have an in-house view of 25 bps
hike in the interest rates. The RBI has already hiked interest rates 11 times
since March 2010 and its lagged impact is clearly visible on the demand
front as well as both the CV and PV space. This decline in demand is
expected to sustain if the RBI continues to focus on curbing inflation at the
expense of growth by undertaking further rate hikes.
Commodity prices hold up amid global concerns…
Global commodity prices have held up despite global concerns. Although
commodity prices witnessed a mild correction in several commodities
ranging from oil to metals, the correction was not as severe. Prices
ranging from steel to aluminium have witnessed a cooling off to the tune
of a couple of percentage points. Also, one commodity that remains
critical to the auto sector and has slowed down to a slight extent is natural
rubber that has come off its peak of ~| 235 and is at ~| 205 (down 13%).
According to our estimates, global commodity prices will soften in the
near to medium term as the global growth outlook seems to taper off
from earlier estimates.
Industry outlook
We maintain our optimistic view towards volume growth in the sector. We
expect an industry wide volume growth of ~13% for FY12E. On an index
performance basis, the BSE Auto index has outperformed the BSE Sensex
with YoY return of -7.4% as compared to -14.3% during the same period.
The demand, which remained buoyant in FY11, has shown signs of
slowing down due to fuel price hikes and higher interest rates. Among our
ICICIdirect.com auto coverage, we remain bullish on frontline OEM stocks
like Tata Motors. In the ancillary coverage, we find favourable valuation in
Bharat Forge and Exide Industries
News & views
• French car-maker PSA Peugeot Citroen plans to create 30,000
direct and indirect jobs in Gujarat after it starts production in 2014.
The company signed an agreement with the Gujarat government
to manufacture 1.65 lakh cars per annum from the Sanand facility
proposed to cover over 600 acres
• Japanese car maker Toyota has announced it will launch the
diesel variants of its small car Liva and sedan Etios in India shortly.
The company, which is present in India through a joint venture
with the Kirloskar Group, had introduced the petrol versions of
Etios last year while Liva was rolled out in June this year
• Maruti Suzuki India has launched the all-new Swift with prices
starting from | 4.22 lakh (ex showroom Delhi). The petrol version
is priced at | 4.22 lakh going up to | 5.53 lakh while the diesel
variant starts at | 5.17 lakh and rising up to | 6.38 lakh
• US-based off-road vehicle-maker Polaris Industries has forayed
into the Indian market with plans to set up an assembly facility
within the next five years as it looks to clock revenues of up to
US$400 million from the country by then. The company, which
has started its operations in the country through a wholly-owned
subsidiary, is looking to set up an R&D centre and introduce its
high-end motorcycles in India in the next three to five years
• Maruti has asked its workers to sign a good conduct bond.
However, with most workers refusing to sign the bond, the
carmaker then recruited 125 ITI trainees and brought in engineers
and supervisors from its Gurgaon plant to resume production.
Production at the current rate equates to just over 10% of regular
work at Manesar. Maruti Suzuki now has about 800 workers
involved in production in Manesar. The plant can produce 1,200
units of the Swift, A-Star and SX4 per day at full capacity
Two–three wheeler industry
The two-wheeler industry held its fort and sustained its volume
momentum as it clocked a robust 17.7% YTD growth. The industry saw
sturdy sales across players despite macro headwinds. Market leader Hero
MotoCorp was back to its 5 lakh unit run rate clocking an impressive
figure of 503,654. Bajaj Auto has also witnessed a robust 16.2% YoY
growth. The two-wheeler segment has continued to outperform the PV
segment backed by strong rural demand. However, the coming few
months would be an important indicator towards the demand scenario.
Market share movement
According to the data released by the Society of Indian Automobile
Manufacturers (SIAM), the domestic market share of two and threewheeler players is as below for August 2011.
Hero MotoCorp (HERHON)
w
• Hero MotoCorp, market leader in the two-wheeler segment,
clocked sales of over 5 lakh units after failing to achieve its 0.5
million units run rate during the previous month
• During the month, the company unveiled its new brand identity
after parting ways with its JV partner Honda Motor Co, Japan.
HMCL domestic market share in the motorcycle segment
remained flat (down ~50 bps MoM) (refer Exhibit: 1, 3)
• The company reported volumes of 503,654 units posting 18.6%
YoY and 2.6% MoM growth. The management is confident of
surpassing sales of over 6 million units in FY12 and its
performance is on track with YTD sales up 21% on a YoY basis
• The scooter segment saw volumes increase 16.1% YoY but fell
13.3% on an MoM basis clocking 32,172 units. The company
plans to increase its focus on the scooter segment with capacity
expansion of ~65% in FY12 to touch ~57,500 units per month
Bajaj Auto (BAAUTO)
• Bajaj Auto posted strong volume numbers boosted by export
growth (up 40.2% YoY). On the domestic front, its market share
improved to 25.7% in the motorcycle segment as domestic sales
picked up ~11.2 % on an MoM basis
• Total volumes for the month were at 382,739 units reflecting a
16.2% YoY growth. In the two-wheeler space, Pulsar and Discover
brands (accounting for ~65% of total sales) continued to be the
volume driver. The domestic contribution to motorcycle sales rose
~341 bps MoM to 67% in August 2011
• The three-wheeler segment for Bajaj Auto maintained its growth
trajectory. It witnessed 11.2% YoY growth at 44,685 units. Exports
contribution in August remained flat on a sequential basis at
59.8% from 61.6% in July
• Overall exports advanced to 138,225 units, a jump of ~40.2%
YoY. The export contribution to total sales in August 2011
declined to 36.1% from 39.6% in July as domestic sales witnessed
a smart improvement
TVS Motors (TVSSUZ)
• TVS Motors’ sales continued its growth momentum with strong
sales across all its segments viz. motorcycles, scooters and
mopeds
• Overall sales figures came in at 194,898 units, which reflected a
16.6% YoY and 3.4% MoM growth. Motorcycle volumes rose to
77,726 units, an increase of 16.8% on a YoY basis
• Scooter sales witnessed an MoM rise of ~4.5% and YoY jump of
~27.7% at 52,253 units. In the two-wheeler segment, the
automatic scooter space has witnessed good traction with an
overall 19.4% YTD volume growth for the segment at 988,585
units
• The mopeds segment performed satisfactorily with 15.9% YoY
jump to 64,919 units. The sales were primarily driven by robust
retail sales in the southern region from the rural segment
• The export segment sustained its northward drive with 57.6% YoY
growth and was up 9% MoM clocking 29,984 units. The
contribution of exports continues to remain higher YoY with YTD
contribution at 14.8%, up from 11.8% in FY11
Four-wheeler industry
The commercial vehicle segment witnessed growth of ~21.1% YoY,
which outperformed the total industry growth. The M&HCV segment grew
at 6.2% YoY while the LCV segment surged 34.5% YoY. However, the
segment continues to face challenges on the interest rates front and
would receive a boost only if the infrastructure activity and capital goods
segment witnesses a stronger pick-up in H2FY12E. The passenger car
volumes remained flat (up 0.4% YoY) with sluggish demand in the A2
segment by Maruti. Escalating input prices continue to remain an
overhang mirroring rising commodity prices. On the positive side,
however, with the advent of the festive season, demand is expected to
pick up from current levels.
Market share movement
According to SIAM, the domestic market share for passenger vehicles
(PV) and CVs in August 2011 has been as follows.
Maruti Suzuki India (MARUTI)
• Maruti Suzuki India (MSIL) witnessed a volume pick-up on an
MoM basis primarily driven by the export segment. The volumes
came in at 91,442 units (down 12.7% YoY) due to labour unrest at
the Manesar plant and demand slowdown in the domestic market
• Domestic sales were at 77,086 units (up 15.9% MoM but down
16.8% YoY). Maruti’s domestic market share remained flat on an
MoM basis at 40.3%in the PV segment. SIAM has pruned down
growth forecasts for passenger cars to 10-12% from the earlier 16-
18% in FY12E. In the immediate future, we believe sales volumes
would remain under pressure until the interest rate cycle peaks
out by H1FY12E
• The company has reached the normal production levels of Swift
despite a large number of permanent workers still remaining away
from work at the Manesar plant. The company further brought
down its dependence on permanent workers who are refusing to
sign a good conduct bond and remaining absent from work at the
Manesar plant. It brought in 50 more ITI trained and experienced
workers at the Manesar plant. With this, the total strength at the
Manesar plant has now reached 1100 people. At this level of daily
production, the company will be able to produce 12,500 units of
Swift in a month. Although the strike is continuing, the production
impact is less compared to last time
• The bread and butter segment, the “A2 segment” (Alto, Swift,
Wagon-R, Zen, A-star, Ritz), sold 52,139 units, growth of 14.6%
MoM. It remains the most interest rate sensitive segment in the PV
space. Also, the C segment (Omni, Versa and Eeco) performed
sluggishly at 12,500 units (down 6.6% MoM)
• The high yielding A3 segment saw volume expansion to the tune
of 9,749 units (up 83.1% MoM but down 7% YoY)
Tata Motors (TELCO)
• Tata Motors witnessed a fall in PV sales in the domestic market
(6.7% decline MoM) as Nano and Indigo volumes got dampened
with rising interest rates at 1,202 and 5,100 units, respectively.
Nano volumes were down on account of maintenance shutdown
and inventory realignment. Increased competition in the segment
is also taking its toll on sales
• At a segmental level, the M&HCV segment registered 5.8% YoY
and 3.6% MoM growth. The LCV segment continues to be the
shining beacon registering 27.1% YoY and 2.4% MoM growth
• Passenger vehicle volumes declined 40.9% YoY and 6.7% MoM.
The UV segment registered growth of 14.2% YoY and 5.3% MoM.
With the arrival of the festive season, demand in the PV space is
likely to improve
• The sales of the Indica range of vehicles were up ~23% MoM at
7,206 units while sales of the Indigo range of vehicles remained
flat at 5,100 units. Similarly, Nano sales declined by 63% MoM to
1,202 units. Nano sales have again started to flounder and
reached their lowest level since November 2010 in which they
touched 509 units. Exports contribution to sales declined to 6.6%
(down ~120 bps on a YoY basis). August 2011 saw exports slide
18.5% YoY and 24.7% MoM at 4,204 units
Mahindra and Mahindra (MAHMAH)
• Mahindra and Mahindra (M&M) reported healthy volume growth in
comparison to its peers in both the automotive as well as FES
segment. The total volumes were up 26.8% YoY to 53,687 units
• The utility vehicle segment, inclusive of four-wheeler pick-ups,
rose to 26,517 units, a 29.2% YoY jump. Volumes in the UV
segment observed a strong performance with higher sales of its
Maximmo and Gio. Sales of Bolero and Scorpio were ~6550 and
~4,400 odd units in August 2011. The sales of Xylo (~2,150 odd
units) have seen an improvement with its competitor the Tata
Sumo witnessing a decline in sales
• Automotive exports touched 1,928 units (up 18.4% YoY but down
16.5% MoM) with overall sales being higher from the Asian region
• The farm equipment segment (FES) has performed well in
comparison to other peers like Escorts and TAFE. It witnessed a
healthy 19.1% YoY rise at 16,003 units. Domestic volumes rose
20.9% YoY at 15,059 units. On the exports front, volumes were
flattish at 944 units. We believe the higher impetus from the
government towards the rural segment along with normal
monsoons would be a positive and help in improving a further
offtake in the agri-related segment with expected demand growth
of 13-15% in FY12E
Ashok Leyland (ASHLEY)
• Ashok Leyland’s (ALL) volumes saw a dip of 7.9% on a sequential
basis and declined 3.5% YoY posting total sales of 7,218 units. CV
sales were impacted on account of high interest rates and fuel
costs rise
• The M&HCV passenger segment declined on an MoM basis (down
~10% MoM) to 2,041 units. The volume driver continues to be the
goods segment clocking 5,095 units (down 2.6% YoY). This rise in
the goods segment has allayed some fears over commercial
orders growth even under such a capex-unfriendly environment
• Exports remained flat in August 2011 with sales touching 1,050
units (down 0.9% QoQ). The export contribution to total sales in
August 2011 rose to 14.5% from 13.5% in the previous month
mainly due to a lacklustre performance of the M&HCV segment in
the domestic market
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