Disappointing festive season for car makers continues in November - Eastern Financiers

The disappointing festive season for car makers continued into November, with Ashok Leyland, Hero Motocorp, TVS Motors and Tata Motors posting drop in sales, while market leader Maruti Suzuki managed to swell. Mahindra & Mahindra was the lone warrior able to maintain a strong growth in a slow market.

India's second largest two-wheeler maker, Bajaj Auto reflected murky sales performance during November 2012, post the festive month of October that witnessed growth in sales of around 4%. Sales growth during the November month edged lower by 0.58% with sales of 372293 units against 374477 units sold in November last fiscal that may primarily be attributed to the sluggish demand in motorcycle sales and slip in exports. The company marked de-growth in sales of 9.43% in November 2012 compared to the prior October month that marked the highest ever domestic sales. Total sales of the company during October 2012 stood at 411052 units.

Maruti Suzuki India that staged an astounding performance during the prior festive month of October with robust growth of about 85%, continued to clamber this month marking sales growth of 12.45% with sales of 103200 units against 91772 units being sold in November last month. The company that was lingering under labor apprehensions at their Manesar plant which led to dented performance in the preceding months of this fiscal and the last fiscal as well seems to be recuperating from their tribulation since last month. Compared to the prior October month, sales edged up marginally by 0.09% with 103108 units being sold during that month.

Hero MotoCorp's cumulative sales during the October-November period of FY13 clocked over a million units of sales which reflects the company's credence to its claims that its flagship Splendor bike has not suffered after the Honda brand name was removed. However, during November 2012 the company witnessed de-growth in sales to the tune of 6.42% with 502305 units being sold against 536772 units sold in November 2011—which as per the Senior VP, Mr. Anil Dua was on account of holidays due to Diwali, while there were no such holidays in the November of 2011, the festive period being in October last year.

India's second largest commercial vehicle maker Ashok Leyland reported de-growth of 6.41% during the month of November 2012 with sales of 7370 units against 7875 units being sold in November last year. The commercial Vehicles division of the company reflected massive de-growth of 36.45%, excluding the small commercial vehicle Dost. Commercial Vehicles sales stood at 4,487 units in November 2012 against 7,061 units in the same period in the previous year.

India's leading sports utility vehicle manufacturer, Mahindra & Mahindra that reported the highest ever monthly sales in the preceding festive month of October endured to clamber this month marking growth of 18.22% with sales of 48143 units during November 2012 against 40722 units in November last fiscal. The company has been reporting beefy set of numerals even in the recent past that may be attributed to their portfolio of products. The farm equipment sector of the company reported growth of 16.83%, following preceding months of de-growth marking sales of 20476 units as against 17527 units being sold in November last year. The overall growth of the company, including the farm equipment sector edged up by 17.80% with sales of 68619 units in November 2012 equated to 58249 units sold in November 2011.

Tata Motors sales during the month of November slipped down by 13.44% after prior month's growth of 5.53% with sales of 66500 units against sales of 76823 units in November last year. Except for the light commercial vehicle division and the Utility Vehicle segment that marked escalation, rest of the divisions witnessed muted sales for the month.

Sales for TVS Motors slithered marginally during November 2012 by 2.11% after marking growth of 3.66% in the preceding festive October month. The robust growth in three wheeler segment was offset by the slowdown in scooters and the exports division. The company sold a total of 171837 units during the penultimate month of the current year against 175535 units being sold in November last year. Sales when compared to the preceding month of October 2012, slipped down 9.77% with 190438 units being sold during the month. The company has been marking muted performance during the months preceding October. Overall Sales slithered during September to the tune of 22.46% followed by prior months down tick of 20.65%, 15.11% and 7.54% during August, July and June respectively.

Stance

Poor consumer sentiments led by escalated level of inflation, coupled with humungous interest rates and rising fuel prices have blemished the festive gains clocked by the Indian automobile manufacturers last month. Nevertheless, moving ahead the overall stance for the automobile sector considering the present scenario is anticipated to be cautiously optimistic.

Source : Equity Bulls

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