Automobile Sales sluggish in April 2013 - Eastern Financiers

Automobile sales for the first month of FY14 was sluggish as almost all the Front-line Auto Companies struggled on account of poor domestic as well as overseas demand. While Bajaj Auto & Hero Motocorp have posted month-on-month improvement in sales, Mahindra & Mahindra was the lone company to show an improved Year-on-year performance. Although the sales in passenger car segment continued to fumble, what's more worrying for the industry is that even the utility vehicle segment - that drove the overall market with over 50% growth last fiscal - has hit a speed breaker, with volumes growing in lower single digits after the excise duty increase in the Budget.

Weak domestic demand coupled with sluggish exports market continued to put pressure on the sales performance of India's second largest two-wheeler maker, Bajaj Auto. The Company sold 344178 units in the first month of the current fiscal as compared to sales of 381590 units in the same month last year, a drop of 10 percent. However, on month-onmonth basis, Bajaj registered growth of 14 percent from March-2013, when it sold 301231 units. The company has reiterated confidence that sales in May will be better than April, continuing the trend of month-on-month rise in sales.

Affected by poor overseas demand, Maruti Suzuki registered 3 percent drop in April-2013 sales at 97302 units. The company had posted total sales of 100415 units in the corresponding month last year. In fact, sales of the Country's largest Car-maker dropped in all four months of 2013. On Month-on Month basis, the drop in sales was a much bigger 19 percent in April as compared to March-2013, when the Company sold 119937 units.

Marking the third consecutive month of drop in total sales, Hero Motocorp's sales in April-2013 stood at 499113 units as compared to 551567 units sold in the same month, last year. However, on a monthly basis, Sales of the country's largest two-wheeler player grew 7 percent from 468283 units sold in March-2013.

Hinduja group company, Ashok Leyland reported close to 14 percent drop in sales for the first month of the ongoing fiscal year. The Company sold 7487 units in April-2013 as against sales of 8686 units in April-2012. In Comparison to the previous month when total sales stood at 14020 units, the drop in sales is a massive 47 percent.

Boosted by decent growth in Exports and the 4W Pick-ups, Mahindra & Mahindra started the current financial year on a positive note. Monthly sales during April-2013 stood at 64634 units as against 57515 units sold by the leading SUV maker in the same month, last year. However, when compared to last month in which the company sold 69234 units, sales dropped by 7 percent.

Tata Motors witnessed its Aprl-2013 sales being scaled down by 15 percent to 51160 units as compared to year-ago sales of 60086 units .When compared to sales of 72712 units last month, the cut is even deeper at almost 30 percent. Almost all the segments except the Indica Vista/Indigo/Nano range, slipped heavily in comparison to last month.

Chennai based TVS Motor recorded marginal drop of 5 percent in its April-2013 sales at 165215 units as compared to 174455 units in the year-ago period. On a month-on-month basis, the company recorded 1 percent decline in its monthly sales from 167583 units in March, this year.

Domestic Car Sales continue to disappoint as poor domestic and overseas demand kept April auto sales muted. While there has been some pick-up in sales from last month but it's difficult to say whether the auto sales have already bottomed out. However, with the gradual easing of interest rates by the RBI and slowly picking signs of a revival in demand, Auto Sales are expected to embark on the recovery path in next few months time.

Source : Equity Bulls

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