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Sales growth remains sedate: Maruti volumes declined 13% yoy to
91,442 units, driven by rising competitive intensity amidst slowing
industry growth and production constraints at the Manesar plant due to
employee unrest. This is the second month of declining sales.
Domestic sales decline sharply (down -17% yoy) due to weakness in
mass market segment: Domestic car market sales declined across
segments. The Mini segment (M800, A-Star, Alto, Wagon R) declined
18% yoy, the Compact segment (Swift, Estilo, Ritz) declined 27% yoy
due to production constraints at Manesar, the entry-level sedan segment
(Dzire) declined 7% yoy, and Vans (Omni, Eeco) declined 12% yoy.
Exports witnessed healthy growth: +19% yoy growth (after months of
declining sales) aided by entry into new markets.
Manesar labor unrest resurfaces: Trouble at Maruti’s Manesar plant
has resurfaced as production was halted again this week with
management asking workers to sign a “good conduct” bond, which has
led to protests – workers continue to insist on their demand of forming a
separate union at the Manesar facility. Media (Business standard) reports
that the workers have got more support as other employee unions (from
neighbouring plants) have given their support and protests have
intensified. Production had already come down to less than half at this
facility vs. a normal daily production of 1,200 cars. Maruti produces
Swift, A-Star hatchbacks, and SX4 at its Manesar plant.
Over the month, Honda took price cuts of ~20% on the Jazz ahead of
the launch of the small car Brio, indicating that the new model will be
priced competitively. The Jazz pricing now starts at Rs550,000.
Over the month, the stock (-10% mom) has underperformed the
broader market (-8% mom) as the industry growth trend remains sedate.
We maintain our Neutral rating on Maruti in view of near-term
headwinds given rising competitive intensity and slowing growth. Maruti
is likely to be under considerable pressure to frequently refresh its
product portfolio as well as enhance its technology.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sales growth remains sedate: Maruti volumes declined 13% yoy to
91,442 units, driven by rising competitive intensity amidst slowing
industry growth and production constraints at the Manesar plant due to
employee unrest. This is the second month of declining sales.
Domestic sales decline sharply (down -17% yoy) due to weakness in
mass market segment: Domestic car market sales declined across
segments. The Mini segment (M800, A-Star, Alto, Wagon R) declined
18% yoy, the Compact segment (Swift, Estilo, Ritz) declined 27% yoy
due to production constraints at Manesar, the entry-level sedan segment
(Dzire) declined 7% yoy, and Vans (Omni, Eeco) declined 12% yoy.
Exports witnessed healthy growth: +19% yoy growth (after months of
declining sales) aided by entry into new markets.
Manesar labor unrest resurfaces: Trouble at Maruti’s Manesar plant
has resurfaced as production was halted again this week with
management asking workers to sign a “good conduct” bond, which has
led to protests – workers continue to insist on their demand of forming a
separate union at the Manesar facility. Media (Business standard) reports
that the workers have got more support as other employee unions (from
neighbouring plants) have given their support and protests have
intensified. Production had already come down to less than half at this
facility vs. a normal daily production of 1,200 cars. Maruti produces
Swift, A-Star hatchbacks, and SX4 at its Manesar plant.
Over the month, Honda took price cuts of ~20% on the Jazz ahead of
the launch of the small car Brio, indicating that the new model will be
priced competitively. The Jazz pricing now starts at Rs550,000.
Over the month, the stock (-10% mom) has underperformed the
broader market (-8% mom) as the industry growth trend remains sedate.
We maintain our Neutral rating on Maruti in view of near-term
headwinds given rising competitive intensity and slowing growth. Maruti
is likely to be under considerable pressure to frequently refresh its
product portfolio as well as enhance its technology.
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