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Growth stifled across the board…
Volume growth crippled…
The auto industry posted a muted volume performance (down 5.1% MoM)
in December after a decent showing in November. The overall growth for
the auto sector came in at 9.4% YoY at ~16.4 lakh units. Commercial
vehicles led the way (up 15.1% YoY) on the back of robust LCV sales,
which witnessed a jump of 23.8% YoY. The PV category continued to bear
the brunt of high interest rates and fuel prices with subdued volumes (up
6.9% YoY but down 5.2% MoM) dragged by Maruti’s lacklustre sales
(down 7.1% YoY). Even higher year-end discounts failed to cheer
consumer sentiments, with price hikes lined up in January, the near term
outlook is not overtly optimistic. Two wheeler sales are also losing steam
(up 9.7% YoY but dipped 6.1% MoM) with major player viz. Hero
MotoCorp and Bajaj Auto clocking single digit growth rates.
Siam industry forecasts converge with our estimates…
Siam has recently come out with its growth estimates for FY13, which fell
in line with our expectations. Domestic car sales are expected to increase
by 11-13% in 2012-13 (I-direct estimate: ~14% growth) as against 0-2% in
the current fiscal. The non-existent growth in the current fiscal is expected
to aid FY13E through its low base. Also, with the likelihood of interest rate
cuts the small car segment is expected to bounce back. Similarly buoyed
by higher rural spending, Siam expects the two-wheeler segment to clock
growth of 11-14% (I-direct estimate: 12-14% growth). We expect two
wheelers to decline to normalised growth with the high base effect kicking
in. The commercial vehicle segment is pegged to grow at 12-14% (I-direct
estimate of 12-15% for M&HCV, 16-18% for LCV). With the expectation of
a better monetary policy, rising business confidence and improving
investment climate, the CV segment is expected to perform well. The
overall automobile sales are estimated to grow in double digits between
10% and 12% converging with our estimate of ~11-13% growth.
Host of product launches in Auto Expo likely to intensify competition…
Total ~60 products were launched at the recently held Auto Expo 2012
(60% new launches and rest variants). The new launches are expected to
lure back buyers, who have stayed away as macros have dented
sentiments. With ~18 product launches in the motorcycle segment, the
competitive intensity is set to become fiercer. Although the impact may be
gradual, launches by players like HMSI, Triumph Motorcycles, etc. is likely
to put pressure on existing domestic players like Bajaj Auto, TVS and Hero
MotoCorp. Total ~13 launches in the PV segment and ~13 in the UV
segment will aid in attracting both new and replacement buyers.
Moreover, a trend seems to have emerged across segments with most of
the new launches occurring in the premium category.
Industry outlook
We maintain our stance of ~13% volume growth in FY12E and remain
optimistic on the longer term growth prospects of the sector. Moreover,
on the commodities front, we expect global commodity prices to soften or
remain at similar levels, going ahead. Natural rubber prices have
moderated from their peak to ~| 200 in December with a further fall seen
in January. However, further hikes in petrol prices and a possible levy of
additional duty on diesel vehicle could hurt buying sentiments.
On an index performance basis, the BSE Auto index has outperformed the
BSE Sensex with YoY return of -7.9% vs. -14.4% during the same period.
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 Balkrishna Industries.
News & views
• Japanese car maker Toyota will consider setting up a diesel engine
plant in India after clarity emerges on policies related to continuance
of subsidies on diesel pricing in forthcoming Budget. The company is
present in India through a JV with the Kirloskar Group and is
investing | 500 crore in setting up a petrol engine plant and
expanding its transmission capacity in Bengaluru
• Commercial vehicle manufacturer Man Force Trucks has recently
announced its foray into the bus segment. The company is eyeing a
50% leap in overall sales at 6,000 units this year. The company also
launched 'Man Airobus' at the 11th Auto Expo with bookings for the |
60 lakh priced-bus already under way
• Bajaj Auto announced the launch of “RE 60”, an ultra-low cost car.
The car is believed to have a mileage of ~40 km per litre and will
have a 200 cc engine. The car will be launched in 2012. However, the
launch of the four wheeler could be a first in Sri Lanka. Bajaj Auto,
known for its two wheelers and three-wheelers is manufacturing a
four-wheeler for the first time
• India's largest carmaker, Maruti Suzuki, plans to launch at least four
cars in 2012 across different segments to regain lost market share
after a disappointing 2011. The company plans to enter the multipassenger
segment with its all-new Ertiga and upgrade its largest
selling small car Alto. It has also unveiled a new concept of a mini-
SUV called XA Alpha, targeting the younger Indian with this lifestyle
vehicle
• Europe's largest two-wheeler maker Piaggio will re-launch its iconic
Vespa scooter in March and will be positioned in the premium
scooter segment. It may also drive in other brands such as Piaggio
scooters and Moto Guzzi motorcycles to India in the long run. The
Italian two-wheeler maker's global brands include Vespa, Aprilia,
Moto Guzzi, Piaggio, Derbi, Gilera and Laverda
Two–three wheeler industry
The effects of the overall demand slowdown are now clearly visible in the
two-wheeler industry also. The growth rates have tapered off from double
digits to 9.7% YoY in the December. The industry had managed to buck
the trend and grow at 16.9% YTD as it remained relatively insulated from
interest rate and fuel price hikes. It has finally shown early signs of
vulnerability to tough macros with disappointing volumes for key players
like Bajaj Auto (down 20.6% MoM) and TVS (down 4.6% MoM). However,
market leader, Hero MotoCorp defied the trend and managed to grow
sequentially with sales of ~5.4 lakh units. On the brighter side, the scooter
segment posed robust sales growth of 17.4% YoY with market leader
HMSI growing at ~45% YoY. Siam expects the two-wheeler segment to
clock growth of 11-14% in FY13E. The three-wheeler industry growth also
tapered off to 7.7% YoY (Siam FY13 growth estimate: 6-9%) with market
leader Bajaj Auto witnessing sequential volume slide of ~1.2%.
Market share movement
According to data released by the Society of Indian Automobile
Manufacturers (Siam), the domestic market share of two and threewheeler
players is as below for December 2011.
Hero MotoCorp (HERHON)
w
• Hero MotoCorp, the market leader in the two-wheeler category,
reported sluggish growth of 7.8% YoY and 0.7% MoM at ~5.4
lakh units. Although the growth rate was dampened due to the
high base effect there are early signs of an overall slowdown in the
domestic two wheeler space
• The company reported a volume figure of 540,276 with YTD sales
at ~46.6 lakh units (up 18.2% YoY). Hero MotoCorp has managed
to outperform its peers even as its volumes remain largely
domestic driven. This reflects the inherent demand for the
company’s products in the urban and rural markets. The company
is expected to surpass its sales target of 6 million units in FY12.
Hero MotoCorp improved its domestic market share in the twowheeler
segment to 45.4% even as Bajaj and TVS lost ground.
However, going ahead, we remain cautious and expect new
launches by competitors to create market share pressures
• The scooter segment of HMCL grossly underperformed the
industry growth of 17.4% YoY with a subdued volume growth of
4.3% YoY at 39,234 units. The company recently showcased a
hybrid scooter “Leap” in the Auto Expo 2012
• The company is undergoing a debottlenecking exercise at its
existing capacities and plans to touch 7 million units by the end of
this fiscal year. The current capacity stands at 6.4 million units
Bajaj Auto (BAAUTO)
• Bajaj Auto (BAL) posted a lacklustre volume performance with
total sales clocking 305,690 lakh units. The company is witnessing
severe pressure in the domestic market with a tepid 2.4% YoY
growth in the two-wheeler segment. Moreover, the company
witnessed a sequential de-growth across all its segments.
However, on the positive front, the three wheeler segment
performed well with a 26.8% YoY growth coupled with robust
export volumes. The export growth momentum has sustained
despite the withdrawal of the DEPB incentives from October 1
• We remain cautious on the domestic growth prospects of Bajaj
Auto. In the domestic motorcycle segment, we expect further
pressures to trickle in. Domestic two-wheeler sales tumbled
sequentially posting a 25.7% MoM de-growth. The Boxer failed to
generate volume momentum and reported weak offtake. BAL lost
market share to the tune of ~120 bps YoY in the domestic twowheeler
space and ~321 bps MoM in the premium motorcycle
segment
• BAL has cut its FY12 sales volume guidance to 4.4 million units
from 4.5 million indicated earlier. The Pulsar and Discover brands
(accounting for ~65% of total sales) continued to be volume
drivers in the motorcycle space. Export contribution to overall
sales shot up to 39.2% primarily due to sluggish domestic sales
• The three-wheeler segment remained the shining beacon for Bajaj
Auto with sales up 26.8% YoY at 41,991 units. The company
recently launched “RE60”, a four-seater intra-city passenger
vehicle meant to compete with three-wheelers
TVS Motors (TVSSUZ)
• TVS Motors reported another month of disappointing volume with
total sales slipping 4.3% MoM to 167,905 units. The company is
experiencing weakened demand across its product portfolio. TVS
underperformed the two wheeler industry growth rate of 9.7% and
de-grew 0.3% YoY
• Domestic motorcycle sales dipped ~12.1% YoY to 39,198 units.
The scooter and moped segment volume growth have shown
signs of weakening with ~ 7.2% and ~7.7% YoY growth. Market
leader HMSI has ramped up its scooter production recently and is
reflected in the subdued volumes. Moped sales grew 7.7% YoY
but fell 3.2% MoM to 66,439 units
• Sluggish motorcycle volumes coupled with a slowdown in
scooters and mopeds may drag down the overall volume growth
to single digit. Moreover, the company has lost market share of
~80 bps YoY in the domestic two wheeler market reflecting in its
weak performance
• Export sales also slithered 7.4% MoM in December clocking
22,481 units. The contribution of exports to overall sales shrunk to
13.4% from 13.8% in November
Four-wheeler industry
The passenger vehicles segment reaffirmed the recent trend with sluggish
sales growth of 6.9% YoY. In the passenger car segment, volumes for
petrol variants were aided by year-end discounts. In contrast, the diesel
variants offered no significant discounts with demand outstripping supply
resulting in high waiting periods. High fuel costs, interest rates and
persistent inflation have dented domestic consumer sentiments with sales
falling ~2.3% YTD in the domestic passenger car segment (Siam forecasts
11-13% growth in FY13). Going forward, we expect the RBI to cut interest
rates on the back of slipping GDP growth benefiting the PV segment. The
commercial vehicle segment grew 15.1% YoY with the LCV segment
being the key volume driver with sales up 23.8% YoY. The LCV segment,
often referred to as the last mile transportation, has been a beneficiary of
the hub and spoke model growing at a robust 29.9% YTD. M&HCV has
withered the interest rate storm with sales rising 7.9% YTD with the
possibility of pent up demand if rate cuts pan out.
Maruti Suzuki India (MARUTI)
• Maruti Suzuki India’s (MSIL) volumes remained flat sequentially
but dipped 7.1% YoY to 92,161 units. The muted volume
performance of the largest car maker in India is a function of
domestic demand slowdown and diesel engine capacity
constraints. Labour issues at Manesar coupled with macro
headwinds in the form of high interest rate and fuel prices have
led to a 16.6% YTD volume decline
• Total domestic sales performance remained fragile at 77,475 units
(down 13.4% YoY). Maruti’s domestic market share in the PV
segment remained flat sequentially at 38.0% (down ~770 bps)
from 45.7% in the same period last year. However, exports
performed well clocking 14,686 units (up 50.5% YoY). We expect
an improvement in sales figures, going ahead, as production
reaches full tilt coupled with the possibility of interest rate cuts by
the RBI
• The volume driving “A2 segment” (Alto, Swift, Wagon-R, Zen, Astar,
Ritz) saw sales languishing at 57,625 units (down 10.6% YoY
and 3.5% MoM). Swift and Alto sales came in at 16,375 (down
5.1% MoM) and 24,113 units (down 1.3% MoM), respectively. The
A2 segment, which is the most interest rate sensitive segment, has
seen volumes slide 18.6% YTD. The C segment (Omni, Versa and
Eeco) has witnessed a slump in volumes at 7,908 units (down
41.6% YoY). The high yielding A3 segment saw volumes declining
15.2% on an MoM basis to 10,032 units
• The company had an order book of ~ 1 lakh units for Swift cars
even after some cancellation of which ~80% comprises the diesel
variant. Therefore, the diesel capacity is being ramped up from the
current ~20,000 per month to ~25,000 units. Additionally, the deal
with Fiat is expected to take the monthly diesel capacity to
~34,000 units per month
• Maruti Suzuki unveiled two new models: the XA Alpha compact
SUV and the seven-seater Ertiga MPV at the recent Delhi Auto
Expo 2012
Tata Motors (TELCO)
• Tata Motors reported robust volumes, up 22% YoY at 82,278 units
driven by strong growth in the PV and LCV segments. The M&HCV
space remain muted on a YoY basis with sales at 19,092 units
(down 1.6% YoY)
• At a segmental level, the passenger vehicle segment recorded
notable volume growth (up 37.7% MoM). Nano volumes
maintained their upward trajectory with sales increasing to 7,466
units (up ~17% MoM). Indica and Indigo sales remained subdued
on a sequential basis at 9,307 and 6,888 units, respectively. In the
UV space, volumes were clocked in at 5,315 units (up ~26%
MoM). The company has recently unveiled the new “Tata Safari
Strome”, the latest variant of the Safari, at the Auto Expo 2012.
• The M&HCV space registered a 12.3% MoM sales growth but
declined 1.6% on a YoY basis. In the LCV space, the company
sustained its supremacy with record domestic sales of 29,500
units. The total LCV sales rose 22% YoY and 5.9% on an MoM
basis
• JLR volumes continued to remain robust with combined Jaguar
and Land Rover sales for November at 29,183 units (up ~12%
MoM and 27% YoY). Till November, JLR sales were up ~20.7%
YTD driven by strong sales of the recently launched Range Rover
Evoque
• Export volumes improved 29.1% on an MoM basis to 5,615 units.
The contribution of exports to total sales rose to 6.8% (up~90
bps) from 5.7% in November
Mahindra and Mahindra (MAHMAH)
• Mahindra and Mahindra (M&M) volumes for December were a
mixed bag. The auto division performed well with sales climbing
up 28.3% YoY. The key volume driver i.e. the UV segment grew
28% YoY coupled with robust volumes from the CV space (up
22.5% YoY). However, on the negative front, the FES segment
disappointed for the second successive month with sales dipping
6.5% sequentially to 16,389 units
• The utility vehicle space, inclusive of four-wheeler pick-ups
registered record volumes of 31,185 units, up 5.9% MoM. The
recently launched XUV500 aided volume growth with sales up
37.6% MoM to 2,253 units. Going forward, the incremental sales
from the XUV500 will assist M&M to further consolidate its
leadership position in the SUV segment. In the pick-up segment,
Maximmo and Gio posted robust sales (up ~35% YoY) at 13,757
units. Bolero sales stood at ~9,160 units while Scorpio volumes
came in at ~4380 units. Xylo sales continued to tumble (down
10.8% MoM) to ~1,460 units as XUV500 continue to lure buyers
• The three wheeler sales remained muted with sales down 2.5%
MoM and down 3.1% YoY at 5,744 units. On the automotive
export front, volumes grew 12% MoM to 2,870 units on a small
base with overall sales driven by the Asian region
• The farm equipment segment (FES) witnessed sales sliding to
16,389 units (down 6.5% MoM). Higher rural incomes and
increased minimum support prices (MSP) have held up volumes
(up18.8% YTD) in the segment
Ashok Leyland (ASHLEY)
• Ashok Leyland (ALL) witnessed robust volumes with total sales up
20.1% YoY and 15.4% MoM at 9,088 units. The M&HCV sales held
up despite adverse macro dampeners (up 14.4% MoM) with LCV
sales increasing to 1,235 units (up ~22% MoM) driven by the
recently launched “Dost”, which posted sales of ~1100 units
• On a segmental basis, volumes in the M&HCV passenger segment
jumped to 2,760 units (up 58.0% YoY). However, the volume
driver M&HCV goods segment reported flattish growth (up 2.6%
YoY) to 5,093 units. The company’s performance in the M&HCV
segment (down 1.6% YTD) has been below par compared to
industry growth of 7.9% YTD
• Export volumes disappointed with sales down ~25% YoY to 1,046
units. The contribution of exports to total sales fell to 11.15% in
December from 17.8% in the November. However, export
volumes have more than doubled ~105% YTD to 8,786 units on a
relatively smaller base
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Growth stifled across the board…
Volume growth crippled…
The auto industry posted a muted volume performance (down 5.1% MoM)
in December after a decent showing in November. The overall growth for
the auto sector came in at 9.4% YoY at ~16.4 lakh units. Commercial
vehicles led the way (up 15.1% YoY) on the back of robust LCV sales,
which witnessed a jump of 23.8% YoY. The PV category continued to bear
the brunt of high interest rates and fuel prices with subdued volumes (up
6.9% YoY but down 5.2% MoM) dragged by Maruti’s lacklustre sales
(down 7.1% YoY). Even higher year-end discounts failed to cheer
consumer sentiments, with price hikes lined up in January, the near term
outlook is not overtly optimistic. Two wheeler sales are also losing steam
(up 9.7% YoY but dipped 6.1% MoM) with major player viz. Hero
MotoCorp and Bajaj Auto clocking single digit growth rates.
Siam industry forecasts converge with our estimates…
Siam has recently come out with its growth estimates for FY13, which fell
in line with our expectations. Domestic car sales are expected to increase
by 11-13% in 2012-13 (I-direct estimate: ~14% growth) as against 0-2% in
the current fiscal. The non-existent growth in the current fiscal is expected
to aid FY13E through its low base. Also, with the likelihood of interest rate
cuts the small car segment is expected to bounce back. Similarly buoyed
by higher rural spending, Siam expects the two-wheeler segment to clock
growth of 11-14% (I-direct estimate: 12-14% growth). We expect two
wheelers to decline to normalised growth with the high base effect kicking
in. The commercial vehicle segment is pegged to grow at 12-14% (I-direct
estimate of 12-15% for M&HCV, 16-18% for LCV). With the expectation of
a better monetary policy, rising business confidence and improving
investment climate, the CV segment is expected to perform well. The
overall automobile sales are estimated to grow in double digits between
10% and 12% converging with our estimate of ~11-13% growth.
Host of product launches in Auto Expo likely to intensify competition…
Total ~60 products were launched at the recently held Auto Expo 2012
(60% new launches and rest variants). The new launches are expected to
lure back buyers, who have stayed away as macros have dented
sentiments. With ~18 product launches in the motorcycle segment, the
competitive intensity is set to become fiercer. Although the impact may be
gradual, launches by players like HMSI, Triumph Motorcycles, etc. is likely
to put pressure on existing domestic players like Bajaj Auto, TVS and Hero
MotoCorp. Total ~13 launches in the PV segment and ~13 in the UV
segment will aid in attracting both new and replacement buyers.
Moreover, a trend seems to have emerged across segments with most of
the new launches occurring in the premium category.
Industry outlook
We maintain our stance of ~13% volume growth in FY12E and remain
optimistic on the longer term growth prospects of the sector. Moreover,
on the commodities front, we expect global commodity prices to soften or
remain at similar levels, going ahead. Natural rubber prices have
moderated from their peak to ~| 200 in December with a further fall seen
in January. However, further hikes in petrol prices and a possible levy of
additional duty on diesel vehicle could hurt buying sentiments.
On an index performance basis, the BSE Auto index has outperformed the
BSE Sensex with YoY return of -7.9% vs. -14.4% during the same period.
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 Balkrishna Industries.
News & views
• Japanese car maker Toyota will consider setting up a diesel engine
plant in India after clarity emerges on policies related to continuance
of subsidies on diesel pricing in forthcoming Budget. The company is
present in India through a JV with the Kirloskar Group and is
investing | 500 crore in setting up a petrol engine plant and
expanding its transmission capacity in Bengaluru
• Commercial vehicle manufacturer Man Force Trucks has recently
announced its foray into the bus segment. The company is eyeing a
50% leap in overall sales at 6,000 units this year. The company also
launched 'Man Airobus' at the 11th Auto Expo with bookings for the |
60 lakh priced-bus already under way
• Bajaj Auto announced the launch of “RE 60”, an ultra-low cost car.
The car is believed to have a mileage of ~40 km per litre and will
have a 200 cc engine. The car will be launched in 2012. However, the
launch of the four wheeler could be a first in Sri Lanka. Bajaj Auto,
known for its two wheelers and three-wheelers is manufacturing a
four-wheeler for the first time
• India's largest carmaker, Maruti Suzuki, plans to launch at least four
cars in 2012 across different segments to regain lost market share
after a disappointing 2011. The company plans to enter the multipassenger
segment with its all-new Ertiga and upgrade its largest
selling small car Alto. It has also unveiled a new concept of a mini-
SUV called XA Alpha, targeting the younger Indian with this lifestyle
vehicle
• Europe's largest two-wheeler maker Piaggio will re-launch its iconic
Vespa scooter in March and will be positioned in the premium
scooter segment. It may also drive in other brands such as Piaggio
scooters and Moto Guzzi motorcycles to India in the long run. The
Italian two-wheeler maker's global brands include Vespa, Aprilia,
Moto Guzzi, Piaggio, Derbi, Gilera and Laverda
Two–three wheeler industry
The effects of the overall demand slowdown are now clearly visible in the
two-wheeler industry also. The growth rates have tapered off from double
digits to 9.7% YoY in the December. The industry had managed to buck
the trend and grow at 16.9% YTD as it remained relatively insulated from
interest rate and fuel price hikes. It has finally shown early signs of
vulnerability to tough macros with disappointing volumes for key players
like Bajaj Auto (down 20.6% MoM) and TVS (down 4.6% MoM). However,
market leader, Hero MotoCorp defied the trend and managed to grow
sequentially with sales of ~5.4 lakh units. On the brighter side, the scooter
segment posed robust sales growth of 17.4% YoY with market leader
HMSI growing at ~45% YoY. Siam expects the two-wheeler segment to
clock growth of 11-14% in FY13E. The three-wheeler industry growth also
tapered off to 7.7% YoY (Siam FY13 growth estimate: 6-9%) with market
leader Bajaj Auto witnessing sequential volume slide of ~1.2%.
Market share movement
According to data released by the Society of Indian Automobile
Manufacturers (Siam), the domestic market share of two and threewheeler
players is as below for December 2011.
Hero MotoCorp (HERHON)
w
• Hero MotoCorp, the market leader in the two-wheeler category,
reported sluggish growth of 7.8% YoY and 0.7% MoM at ~5.4
lakh units. Although the growth rate was dampened due to the
high base effect there are early signs of an overall slowdown in the
domestic two wheeler space
• The company reported a volume figure of 540,276 with YTD sales
at ~46.6 lakh units (up 18.2% YoY). Hero MotoCorp has managed
to outperform its peers even as its volumes remain largely
domestic driven. This reflects the inherent demand for the
company’s products in the urban and rural markets. The company
is expected to surpass its sales target of 6 million units in FY12.
Hero MotoCorp improved its domestic market share in the twowheeler
segment to 45.4% even as Bajaj and TVS lost ground.
However, going ahead, we remain cautious and expect new
launches by competitors to create market share pressures
• The scooter segment of HMCL grossly underperformed the
industry growth of 17.4% YoY with a subdued volume growth of
4.3% YoY at 39,234 units. The company recently showcased a
hybrid scooter “Leap” in the Auto Expo 2012
• The company is undergoing a debottlenecking exercise at its
existing capacities and plans to touch 7 million units by the end of
this fiscal year. The current capacity stands at 6.4 million units
Bajaj Auto (BAAUTO)
• Bajaj Auto (BAL) posted a lacklustre volume performance with
total sales clocking 305,690 lakh units. The company is witnessing
severe pressure in the domestic market with a tepid 2.4% YoY
growth in the two-wheeler segment. Moreover, the company
witnessed a sequential de-growth across all its segments.
However, on the positive front, the three wheeler segment
performed well with a 26.8% YoY growth coupled with robust
export volumes. The export growth momentum has sustained
despite the withdrawal of the DEPB incentives from October 1
• We remain cautious on the domestic growth prospects of Bajaj
Auto. In the domestic motorcycle segment, we expect further
pressures to trickle in. Domestic two-wheeler sales tumbled
sequentially posting a 25.7% MoM de-growth. The Boxer failed to
generate volume momentum and reported weak offtake. BAL lost
market share to the tune of ~120 bps YoY in the domestic twowheeler
space and ~321 bps MoM in the premium motorcycle
segment
• BAL has cut its FY12 sales volume guidance to 4.4 million units
from 4.5 million indicated earlier. The Pulsar and Discover brands
(accounting for ~65% of total sales) continued to be volume
drivers in the motorcycle space. Export contribution to overall
sales shot up to 39.2% primarily due to sluggish domestic sales
• The three-wheeler segment remained the shining beacon for Bajaj
Auto with sales up 26.8% YoY at 41,991 units. The company
recently launched “RE60”, a four-seater intra-city passenger
vehicle meant to compete with three-wheelers
TVS Motors (TVSSUZ)
• TVS Motors reported another month of disappointing volume with
total sales slipping 4.3% MoM to 167,905 units. The company is
experiencing weakened demand across its product portfolio. TVS
underperformed the two wheeler industry growth rate of 9.7% and
de-grew 0.3% YoY
• Domestic motorcycle sales dipped ~12.1% YoY to 39,198 units.
The scooter and moped segment volume growth have shown
signs of weakening with ~ 7.2% and ~7.7% YoY growth. Market
leader HMSI has ramped up its scooter production recently and is
reflected in the subdued volumes. Moped sales grew 7.7% YoY
but fell 3.2% MoM to 66,439 units
• Sluggish motorcycle volumes coupled with a slowdown in
scooters and mopeds may drag down the overall volume growth
to single digit. Moreover, the company has lost market share of
~80 bps YoY in the domestic two wheeler market reflecting in its
weak performance
• Export sales also slithered 7.4% MoM in December clocking
22,481 units. The contribution of exports to overall sales shrunk to
13.4% from 13.8% in November
Four-wheeler industry
The passenger vehicles segment reaffirmed the recent trend with sluggish
sales growth of 6.9% YoY. In the passenger car segment, volumes for
petrol variants were aided by year-end discounts. In contrast, the diesel
variants offered no significant discounts with demand outstripping supply
resulting in high waiting periods. High fuel costs, interest rates and
persistent inflation have dented domestic consumer sentiments with sales
falling ~2.3% YTD in the domestic passenger car segment (Siam forecasts
11-13% growth in FY13). Going forward, we expect the RBI to cut interest
rates on the back of slipping GDP growth benefiting the PV segment. The
commercial vehicle segment grew 15.1% YoY with the LCV segment
being the key volume driver with sales up 23.8% YoY. The LCV segment,
often referred to as the last mile transportation, has been a beneficiary of
the hub and spoke model growing at a robust 29.9% YTD. M&HCV has
withered the interest rate storm with sales rising 7.9% YTD with the
possibility of pent up demand if rate cuts pan out.
Maruti Suzuki India (MARUTI)
• Maruti Suzuki India’s (MSIL) volumes remained flat sequentially
but dipped 7.1% YoY to 92,161 units. The muted volume
performance of the largest car maker in India is a function of
domestic demand slowdown and diesel engine capacity
constraints. Labour issues at Manesar coupled with macro
headwinds in the form of high interest rate and fuel prices have
led to a 16.6% YTD volume decline
• Total domestic sales performance remained fragile at 77,475 units
(down 13.4% YoY). Maruti’s domestic market share in the PV
segment remained flat sequentially at 38.0% (down ~770 bps)
from 45.7% in the same period last year. However, exports
performed well clocking 14,686 units (up 50.5% YoY). We expect
an improvement in sales figures, going ahead, as production
reaches full tilt coupled with the possibility of interest rate cuts by
the RBI
• The volume driving “A2 segment” (Alto, Swift, Wagon-R, Zen, Astar,
Ritz) saw sales languishing at 57,625 units (down 10.6% YoY
and 3.5% MoM). Swift and Alto sales came in at 16,375 (down
5.1% MoM) and 24,113 units (down 1.3% MoM), respectively. The
A2 segment, which is the most interest rate sensitive segment, has
seen volumes slide 18.6% YTD. The C segment (Omni, Versa and
Eeco) has witnessed a slump in volumes at 7,908 units (down
41.6% YoY). The high yielding A3 segment saw volumes declining
15.2% on an MoM basis to 10,032 units
• The company had an order book of ~ 1 lakh units for Swift cars
even after some cancellation of which ~80% comprises the diesel
variant. Therefore, the diesel capacity is being ramped up from the
current ~20,000 per month to ~25,000 units. Additionally, the deal
with Fiat is expected to take the monthly diesel capacity to
~34,000 units per month
• Maruti Suzuki unveiled two new models: the XA Alpha compact
SUV and the seven-seater Ertiga MPV at the recent Delhi Auto
Expo 2012
Tata Motors (TELCO)
• Tata Motors reported robust volumes, up 22% YoY at 82,278 units
driven by strong growth in the PV and LCV segments. The M&HCV
space remain muted on a YoY basis with sales at 19,092 units
(down 1.6% YoY)
• At a segmental level, the passenger vehicle segment recorded
notable volume growth (up 37.7% MoM). Nano volumes
maintained their upward trajectory with sales increasing to 7,466
units (up ~17% MoM). Indica and Indigo sales remained subdued
on a sequential basis at 9,307 and 6,888 units, respectively. In the
UV space, volumes were clocked in at 5,315 units (up ~26%
MoM). The company has recently unveiled the new “Tata Safari
Strome”, the latest variant of the Safari, at the Auto Expo 2012.
• The M&HCV space registered a 12.3% MoM sales growth but
declined 1.6% on a YoY basis. In the LCV space, the company
sustained its supremacy with record domestic sales of 29,500
units. The total LCV sales rose 22% YoY and 5.9% on an MoM
basis
• JLR volumes continued to remain robust with combined Jaguar
and Land Rover sales for November at 29,183 units (up ~12%
MoM and 27% YoY). Till November, JLR sales were up ~20.7%
YTD driven by strong sales of the recently launched Range Rover
Evoque
• Export volumes improved 29.1% on an MoM basis to 5,615 units.
The contribution of exports to total sales rose to 6.8% (up~90
bps) from 5.7% in November
Mahindra and Mahindra (MAHMAH)
• Mahindra and Mahindra (M&M) volumes for December were a
mixed bag. The auto division performed well with sales climbing
up 28.3% YoY. The key volume driver i.e. the UV segment grew
28% YoY coupled with robust volumes from the CV space (up
22.5% YoY). However, on the negative front, the FES segment
disappointed for the second successive month with sales dipping
6.5% sequentially to 16,389 units
• The utility vehicle space, inclusive of four-wheeler pick-ups
registered record volumes of 31,185 units, up 5.9% MoM. The
recently launched XUV500 aided volume growth with sales up
37.6% MoM to 2,253 units. Going forward, the incremental sales
from the XUV500 will assist M&M to further consolidate its
leadership position in the SUV segment. In the pick-up segment,
Maximmo and Gio posted robust sales (up ~35% YoY) at 13,757
units. Bolero sales stood at ~9,160 units while Scorpio volumes
came in at ~4380 units. Xylo sales continued to tumble (down
10.8% MoM) to ~1,460 units as XUV500 continue to lure buyers
• The three wheeler sales remained muted with sales down 2.5%
MoM and down 3.1% YoY at 5,744 units. On the automotive
export front, volumes grew 12% MoM to 2,870 units on a small
base with overall sales driven by the Asian region
• The farm equipment segment (FES) witnessed sales sliding to
16,389 units (down 6.5% MoM). Higher rural incomes and
increased minimum support prices (MSP) have held up volumes
(up18.8% YTD) in the segment
Ashok Leyland (ASHLEY)
• Ashok Leyland (ALL) witnessed robust volumes with total sales up
20.1% YoY and 15.4% MoM at 9,088 units. The M&HCV sales held
up despite adverse macro dampeners (up 14.4% MoM) with LCV
sales increasing to 1,235 units (up ~22% MoM) driven by the
recently launched “Dost”, which posted sales of ~1100 units
• On a segmental basis, volumes in the M&HCV passenger segment
jumped to 2,760 units (up 58.0% YoY). However, the volume
driver M&HCV goods segment reported flattish growth (up 2.6%
YoY) to 5,093 units. The company’s performance in the M&HCV
segment (down 1.6% YTD) has been below par compared to
industry growth of 7.9% YTD
• Export volumes disappointed with sales down ~25% YoY to 1,046
units. The contribution of exports to total sales fell to 11.15% in
December from 17.8% in the November. However, export
volumes have more than doubled ~105% YTD to 8,786 units on a
relatively smaller base
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