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Industry News
Not The End Of The Tunnel - Automobile Monthly Sales Update - PINC Sector Report
Posted On : 2011-12-02 10:13:43( TIMEZONE : IST )
Amidst the gloom and doom surrounding it, the passenger vehicle industry pulled out a surprisingly good performance in November. Except for Maruti Suzuki (MSIL) and Honda, the latter being affected due to floods in Thailand, all other players reported a positive growth. MSIL is limping back to normalcy after being impacted by the labor unrest in the last three months. With diesel cars sales in overdrive, the company cashed in on the hoopla with a Rs10k increase on diesel variants. A possible deal with Fiat for supply of 100k engines per year will further boost MSIL's diesel car sales. Hyundai's EON has failed to strike a cord with customers and this is reflected in a modest 11% growth in domestic dispatches. However, a 70% jump in exports on a low base led to 28% growth in overall volumes. Mahindra & Mahindra (M&M) posted excellent volumes for the auto division while tractor dispatches showed fatigue after the high of last month. Tata Motors beat our estimates with aid from the passenger car volumes especially the Indica. MHCV dispatches were stable, clocking a growth of 9%, and LCV dispatches were back to normal. With the exception of TVS Motors, all two wheeler manufacturers posted a robust 20% plus growth. Hero MotoCorp beat our estimate with second highest ever monthly volumes.
Two-wheelers: While the two wheeler industry continued to post a high double digit growth, the management commentary from both TVS Motor and Bajaj Auto was cautious. Growth rates are expected to moderate on a high base.
Passenger Vehicles: Hyundai and Tata Motors reported strong volumes while Maruti is getting its house in order post the crippling labour unrest of last three months.
Commercial Vehicles: MHCV sales continue to remain stable while LCVs see a strong demand momentum. Some slowdown in MHCV volumes is expected as the economy cools due to the anti-inflationary stand.
Our Viewpoint
Despite the encouraging performance during the month and a couple of petrol price cuts, we maintain our cautious outlook for the passenger car industry. The two wheeler industry, although better placed, would see growth slowing down on a high base. Our top picks in the sector are Ashok Leyland, Bajaj Auto and Mahindra & Mahindra.
