Auto Sales Update - strong festival demand: Edelweiss

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n  Hero Honda: Crosses half a million mark

Hero Honda’s volumes were robust at over 505,553 units (up 17% M-o-M; 43% Y-o-Y). The company recently increased capacity at its Uttaranchal plant which partially accounted for the higher production. Apart from the strong festival demand, volumes were also supported by the launch of new Splendor Pro.

n  Mahindra & Mahindra: Robust tractor volumes

Mahindra & Mahindra’s (M&M) tractor volumes sprung a surprise with volumes up 43% M-o-M and 31% Y-o-Y. Even accounting for seasonal factors, the growth was robust, indicating the strong underlying demand. The UV space (down 4% M-o-M, up 21% Y-o-Y) was broadly on expected lines; pick up in four wheelers seemed to have been impacted by production constraints.

n  Maruti Suzuki: Inventory build-up boosts volumes

Maruti Suzuki’s (MSIL) domestic volumes grew 13% M-o-M, to 107,133, posting total sales of 118,908 units (up 10% M-o-M, 39% Y-o-Y). Sales were higher than production capacity (of 110,000 units/month), as the company reduced its inventory levels. All segments performed strongly, but notably robust were the A2 space (up 13% M-o-M, partially supported by newly launched Alto – K series) and vans (up 11% M-o-M – EECO continues to perform strongly).

n  Tata Motors: Strong PV sales; CV sales as estimated

As expected, post change in emission norms in September 2010, Tata Motors’ (TTMT) M&HCV sales reported sequential decline, down 18% M-o-M. LCV sales were, however, positive (up 8% M-o-M; 11% Y-o-Y), despite strong competition from new product launches. Passenger vehicles showed strong growth (up 20% M-o-M, 24% Y-o-Y), while the Indica range (compact segment) disappointed. The sedan segment (Indigo) performed strongly with the new Manza being well received. However, Nano volumes plunged to ~3,000 units (from 7,000 two months ago). Jaguar LandRover volumes continued to perform strongly.

n  Outlook: Festivities start; robust volumes continue

With the onset of the festive season, sales remain strong across the two wheeler and passenger car segments. Going forward, we expect the strong trends to continue although growth rates could decline on a higher base. M&HCV sales could be impacted after the change in emission norms.