India Autos October 2010 Sales: Growth Momentum Continues:: Citi

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India Autos
October 2010 Sales: Growth Momentum Continues

 Two Wheeler sales rose a strong 44% — driven by Hero Honda, which reported a
very strong 43% YoY, benefiting from new model launches (new Super Splendor,
the new Hunk & the Splendor Pro). TVS Motors volumes rose a robust 46% YoY
with motorcycle volumes growing at c49%. We await details on Baja Auto’s sales
numbers to better understand market share dynamics.


 Maruti Suzuki: Robust Oct sales, domestic volumes grow 50% Y/Y — MSIL
reported a healthy growth trend across its product portfolio. The high volume A2
segment grew 51% YoY, indicating a possible gain in market share. The A3
segment also grew at a healthy 32%. The C segment rose c92% YoY, driving
overall volume growth to 39%. Exports continue to be impacted by reducing
dispatches to EU. Mgmt noted that the company is exploring new export markets.

 M&M: Sales grow c32% YoY as supply constraints are resolved — 1HFY11 had
been impacted by supply constraints for M&M. Floods had also impacted
September dispatches. However, Oct sales reflect a significant pick-up in the
growth momentum, with tractor volumes growing a strong 29% YoY (+39% MoM).
Mgmt noted that vendor-related issues have been resolved. UV volumes had as
slight sequential slippage, though YoY growth was a healthy 21%. With a good
monsoon we expect the tractor segment to continue to register healthy volumes
over the next 6 months. Residual growth in the tractor segment for FY11, as per
our forecasts, is 17%.

 Tata Motors: Healthy CV sales growth at 12%; Nano disappoints — MHCV sales
grew at 14% YoY, partially impacted by the Shraadh (a period considered
unlucky). The pre-buy in Sept resulted in 18% MoM decline. Indica sales growth
at ~56% MoM was a positive surprise, though a muted 1% YoY growth indicates
TTMT has to recoup considerable market share losses. Indigo continued its
healthy growth trend, with October being the last month with a benign base (pre-
Manza launch). Nano sales disappointed, yet again, with 44% decline MoM. Mgmt
noted that shifting the capacity from Uttarakhand to the new Sanand plant had
resulted in temporary production bottlenecks and production will regain
momentum once capacity at the new plant stabilizes.

 New model launches — 1) Tata Motors launched the Aria crossover vehicle with a
2.2 litre. 140 PS DICOR engine. The Aria is priced at Rs1.32mn – Rs1.59mn (exshowroom
Mumbai), and is likely to compete with Toyota Innova and the Mahindra
Xylo in the crossover space, 2) Skoda launched a new, low-priced edition of the
Fabia. The base petrol version costs Rs419,000 (ex-showroom Maharashtra)
against Rs501,000 earlier, while the top-end diesel variant costs Rs649,000. 3)
Hyundai Motors launched its luxury SUV Santa Fe, priced at Rs 2.09mn- Rs
2.29mn, 4) Honda SIEL Cars introduced new version of the City with enhanced
i nteriors, priced at Rs 953,000- Rs 1.03mn (ex-showroom Delhi).