Auto Expo - “SUVS, Scooters and CVs steal the show”:: LKP

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

SUVS, Scooters and CVs steal the show

We visited the 11^th Auto Expo at Delhi. Unlike the previous auto expo where the small car segment was the buzz word, this time we found them in very small numbers. Main attractions were Maruti Ertiga, Ford Ecosport, Ssangyong models, Bajaj RE60, new scooter launches and whole slew of concept cars. Quite clearly SUV’s, scooters and CVs stole the show this time around.

2 wheelers

In the motorcycle segment, with Honda’s Dream Yuga, Hero Motocorp’s Passion XPro and Ignitor, TVS Radeon and Suzuki’s Hayate launches expected this year, the executive segment will see a lot of competition as they will be positioned at similar price points. Also with Yamaha R15, Honda’s CBR 150R coming up in the >150cc segment competition in premium segment will also increase.

In the scooters segment, however there was a solid show put up by each and every player. Honda’s new Dio, TVS’s concept scooter Qube, Hero’s Maestro, Yamaha’s Ray, Fino, Meo and Xeon, Suzuki’s Swish125 were the attractions entailing rising competition for Honda’s warhorse Activa. Hero’s hybrid concept scooter Leap was one of the best concept scooters.

Passenger cars/SUVs

Passenger cars put up a lackluster show this time, as there are not too many cars lined up for the next two years with just one small car launch of Chevrolet Sail as against a flood of small car launches last time. However, SUVs stole the show with a range of vehicles coming from everywhere. M&M had put up their recently launched SUV XUV500 and Ssangyong models of Actyon and Rexton. Ford showed their upcoming attraction the Ecosport, Toyota portrayed the new Fortuner, Maruti’s upcoming offering Ertiga, Nissan’s Evalia, Force Motors’s Force1, Renault’s Duster and a bunch of concept vehicles including HND7(Hexa Space) from Hyundai were the highlights of the Auto Expo. Ashok Leyland’s concept SUV Stile was the most prominent of the concept SUVs as it will mark their entry into the SUV market. Maruti’s XAAlpha (compact SUV) was also one of the major attractions.

CVs

CV makers like Ashok Leyland, Tata Motors, Volvo, Daimler, AMW etc had come with a big bang. Ashok Leyland showed their new hi-tech 55 seater bus named as Jan Bus along with Partner LCV in JV with Nissan. Tata Motors displayed 7 tonner and 10 tonner Ultra LCVs based on World LCV model and a range of Prima buses. Mahindra Navistar also showed their 25 tonner and 30 tonner HCVs, the latter being used for cement mixing. AMW and Volvo displayed an array of world class trucks. Bajaj’s recently launched RE60 was the centre of attraction among CVs.

Our take on the auto expo and the stocks

With a slew of launches in the scooters segment, the industry is definitely expecting the scooters segment to outperform the two wheeler sector. With unlisted players like Yamaha and Suzuki coming with new offerings, there seems to be a threat to the market leader Honda who came out with subdued scooter offering s in the expo. On the motorcycle side, Hero Motocorp put up a good show, while Bajaj and TVS(view – bullish) disappointed. Honda tried to match up with Hero, but could not succeed to a great extent. On the four wheeler side, SUVs had a good time, with M&M emerging as a clear leader as most of the competitive launches unveiled are still in concept stage, while the closest competitor Ford Ecosport may get a timid response due to absence in petrol segment. Maruti Ertiga may pose a surprise with pricing yet to be unveiled. Toyota Fortuner with auto transmission also may do good volumes, while Nissan Evalia, Renault Duster and Ashok Leyland’s Stile may give competition to Toyota Innova. Though M&M did not display Mini Xylo, we believe it will be one of the best sellers. Additionally Ssangyong models will do good for the company. There were not too many launches on the car side apart from GM Sail, as the industry is not expecting any significant positives from car business considering the current negative sentiments.

Company wise, we still like Bajaj Auto (View – bullish) despite their conspicuous absence in the show, because a new Pulsar variant, Discover variant and KTM bikes are in the offing and the company is doing far better in export markets. We are neutral on Hero Motocorp (View – Neutral), however any expedition in new capacities may turn us positive on the stock. We are still cautious on Maruti(View – Bearish), as the company has no plans for launching any small car, which is the bread and butter segment for them this year as evident from the auto expo. Success of Ertiga also depends on how customers respond to the low ground clearance and pricing. Tata Motors’ (View – Bullish) display of JLR models was excellent and the range of trucks to be launched strengthens our confidence in the stock. We even like Ashok Leyland (View – bullish) with their 2013 entry in SUV segment and a range of LCVs. We also believe that M&M (View – bullish)’s products will find a good traction considering the boost it will get from Ssangyong and XUV 500. Currently we are cautious on the sector, however with interest rate cycle expected to turn in 2012, we may turn positive on the sector.