Automobile Sales – December 2012 - Yet Another Disappointing Performance - Nirmal Bang

Automobile sales in December 2012 were dismal as the month is seasonally weak, being the last month of a calendar year. Bajaj Auto, Honda Motorcycles and Scooters India (HMSI), Ford India and Honda Cars India reported YoY growth in sales, primarily due to a low base. On MoM basis, most companies reported a decline in sales. TVS Motor Company (down 8% YoY), Toyota Kirloskar Motors (down 24% YoY) and Mahindra & Mahindra's (M&M) tractor division (down 11% YoY) disappointed, while Hero MotoCorp was the lone company to come out with a positive surprise.

In the two-wheeler space, all companies barring Hero MotoCorp reported MoM decline in sales. In our view, Hero MotoCorp's sales were up because of higher vehicle despatch to dealers. HMSI continued its good show, posting a 14% YoY growth in sales backed by higher motorcycle sales (up 35% YoY). Bajaj Auto also reported a 13% YoY growth in sales, primarily on a low base, but MoM its sales were down 8%. TVS Motor Company's sales were most disappointing (down 8%), posting a steep 32% YoY drop in scooter sales and 8% YoY fall in moped sales. Its motorcycle sales were up 6% YoY following the recent launch of Phoenix model.

In the passenger car space, the story was more or less the same as most players reported negative-to-flat growth in sales. Leading the pack of losers were: (1) Tata Motors - car sales down 52% YoY and 21% MoM, (2) Toyota Kirloskar- sales down 24% YoY, (3) GM India - sales down 22% YoY. In the utility vehicle (UV) space, M&M continued its strong show with its sales improving 18% YoY. Market leader Maruti Suzuki India (MSIL) posted flattish growth of 3% YoY, despite its Manesar plant's output touching the peak level.

Commercial vehicle (CV) sales continued to remain under intense pressure, with market leader Tata Motors reporting a 46% YoY drop in medium and heavy commercial vehicle (MHCV) sales followed by Ashok Leyland with a 35% YoY drop in MHCV sales. VE Commercial Vehicles (VECV) reported a 20% YoY drop in overall sales.

Key highlights

- MSIL posted 3% YoY growth in sales, despite its Manesar plant's output touching 1,900 cars/day. Mini-segment vehicle sales were hit the most, declining 15% YoY and 11% MoM, despite the launch of Alto 800 car in October 2012.

- Tata Motors reported 20% YoY drop in sales following lower MHCV sales (down 45% YoY) and passenger car sales (down 52% YoY), However, the impact of this was cushioned by a 28% YoY growth in light commercial vehicle (LCV) sales.

- M&M's automotive division reported a 6% YoY growth in sales, mainly driven by a 18% YoY rise in passenger vehicle sales. Its three-wheeler sales were down 9% YoY, while its tractor segment posted a 11% YoY drop in sales, despite a low base.

- GM India and Toyota Kirloskar India witnessed a steep 22%/24% YoY drop in sales, respectively, while Hyundai India reported a 10% YoY fall in domestic sales. Honda Cars India reported strong 296% YoY growth due to a low base.

- In two-wheelers, market leader Hero MotoCorp posted flattish growth on YoY basis, but its sales were up 8% MoM, which came as a positive surprise

- Bajaj Auto posted double-digit growth of 13% YoY with its sales growing across segments on a low base.

- TVS Motor Company reported a decline in sales by 8% on account of lower scooters and moped sales.

- HMSI posted a 14% YoY growth in sales backed by higher motorcycle sales (up 35% YoY). It scooters sales fell 1% YoY.

Source : Equity Bulls

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