Indian Automobile sector - Elara Capital

Monthly sales analysis - Automobiles

India Automobiles

Marching on

Auto sales for the month of July'10 across product segments and companies were largely in-line with our expectations. Commercial vehicle (CV) sales continued to be robust on account of pre-buying due to September end emission norm change and robust industrial output. Passenger vehicles (PVs) and two wheelers (TWs) have continued to rally with bounce back in urban sales and new model launches.

Tata Motors

Robust growth in Nano sales at 9 thousand units aided a growth of 69% in the passenger car segment. The pre-buying due to impending emission norms change (end of Sep'10) continues in the medium and heavy commercial vehicles (M&HCVs) segment.

Maruti Suzuki

Volumes in line with our expectation of a little over 100 thousand units. The hugely successful Eeco leads the growth in A2 segment for the company. Though the robust volume story looks to be on track for MSIL despite the much hyped competitive pressures, the major hangover on the stock still remains to be Suzuki's decision to hike royalty costs (from 3.4% to 5.1%).

Hero Honda

The company continued to post robust growth of close to 17% to 427 thousand units. With the easing of few production constraints, we expect the company to get closer to 500 thousand units a month by the end of FY11.

Bajaj Auto

The company's total sales stood at 318 thousand units, a growth of 65% over the corresponding period of last year. adjusted domestic motorcycle sales were recorded at 192 thousand units, which is still well short of its eventual target of 240 thousand units. This is expected to improve in the coming months on capacity ramping up.

Source : Equity Bulls

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