Automobiles

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February 02, 2015
Automobiles
Automobile sales in January 2015: Good start for passenger and commercial vehicles; two-wheelers tepid
The domestic automobile industry started calendar year 2015 on a promising note with passenger vehicle (PV)
manufacturers reporting an improved performance led by the market leader, Maruti Suzuki India Ltd (MSIL). Despite
the excise duty increasing by 4-6% at the start of the year, the manufacturers reported a resilient performance. The
medium and heavy commercial vehicle (MHCV) segment was once again the standout performer of the month with
incumbents reporting a growth in excess of 30%. The growth figures from the industry underline the view that the
segment is firmly on the path of recovery. The light commercial segment (LCV) volumes continue to remain weak with
all manufacturers barring Ashok Leyland Ltd (ALL) reporting a decline. The rate of decline for the LCV segment
continues to fall and we maintain our stance that the segment is expected to bottom out in Q4FY2015. In contrast to
the MHCV and PV segments, the two-wheeler segment had a tepid start to the year. Lack of pick-up in the domestic
motorcycle segment, coupled with issues in the key export geographies for manufacturers resulted in a sub-par
performance. The tractor segment continues to remain under pressure with a volume decline of nearly 30%.
Key takeaways from the month’s performance are given below:
Š The two-wheeler industry had a soft start to the new calendar year. The market leader, Hero MotoCorp Ltd (HMCL)
reported a marginal decline in the volumes for the month. TVS Motor Company (TVS), which has been growing at
20% plus saw a sharp fall in growth rate to 1.2%. While for Bajaj Auto (Bajaj) in addition to the woes in the
domestic market, the political turmoil in the key export market of Sri Lanka and Nigeria translated in a 9.2% fall
in volumes.
Š In the PV category, the market leader, MSIL, reported an impressive 9.3% growth in domestic volumes with growth
across all segments except the entry car (Alto and WagonR) segment. The strong product folio and shift in favour
of petrol models has been driving volumes for the company. Tata Motors (TAMO) launched the hatchback Bolt
during the month which along with the recently launched Zest boosted volumes by 18.9%. Although, M&M PV
volumes were down 5.0%, but the rate of fall was lower than expected.
Š The MHCV segment was again the standout performer of the month. Volumes in the segment for TAMO and ALL
were higher by 38% and 44% respectively. The light commercial vehicle (LCV) segment (especially below 2mt)
continues to decline. We expect the LCV segment to bottom out in Q4FY2015.
Š The tractor segment reported a nearly 30% drop in volumes for the month of January, in line with our estimates.
The consumer sentiment in the tractor segment continues to remain weak given the deficient monsoon in the
country and the high base of last year making things worse.
Picks: We continue to prefer HMCL, MSIL and ALL among the auto stocks under our coverage.
sharekhan
Sector Update
Company-wise dispatches for January 2015 (units)
Hero MotoCorp
Jan-15
Jan-14
MoM
(%)
YTD
FY14
YoY
(%)
Comments
Two-wheelers
558,982
561,253
6.3
-0.4 5,615,202 5,217,686
7.6
Growth rate continues to remain low
due to a high base and some weakness
in the domestic motorcycle segment.
Bajaj Auto
Jan-15
Jan-14
MoM
(%)
YoY
(%)
YTD
FY14
YoY
(%)
Comments
Motorcycles
246,955
281,390
0.3
-12.2 2,866,070 2,878,502
-0.4
Weakness in the domestic motorcycle
segment continues. Motorcycle exports
affected due to political turmoil in Sri
Lanka and Nigeria.
Three-wheelers
41,791
36,781
-2.8
13.6
373,964
20.7
Domestic three-wheeler post strong
growth during the month. Exports
affected due to issues in Nigeria and
Egypt.
Total two- and
three-wheelers
288,746
318,171
-0.2
-9.2 3,317,278 3,252,466
2.0
Exports of above
142,992
137,644
-13.9
3.9 1,594,466 1,323,743
20.5
Export growth slows down due to
political turmoil in key geographies of
Sri Lanka and Nigeria, as well as foreign
exchange issues in Egypt.
TVS Motor
Jan-15
Jan-14
MoM
(%)
YoY
(%)
YTD
FY15
YTD
FY14
YoY
(%)
Comments
Motorcycles
69,949
65,449
-0.3
6.9
809,331
662,559
22.2
Motorcycle segment growth slows down
as exports fall during the month.
Domestic motorcycle volumes continue
to grow in double digits.
Scooters
56,032
45,198
6.9
24.0
595,588
385,912
54.3
Incremental volumes from the newly
launched Scooty Zest and increasing
popularity of Jupiter aiding growth.
Mopeds
55,535
68,929
-6.5
-19.4
632,101
591,733
6.8
181,516
179,576
-0.3
1.1 2,037,020 1,640,204
24.2
7,082
6,737
-28.4
5.1
65,824
34.4
188,598
186,313
-1.7
1.2 2,125,464 1,706,028
24.6
Tata Motors
Jan-15
Jan-14
MoM
(%)
YoY
(%)
YTD
FY15
YTD
FY14
YoY
(%)
Comments
MHCV domestic
11,273
8,166
-9.4
38.0
99,943
88,660
12.7
Impressive growth in the heavy vehicle
segment. A highly depleted base of last
year inflating the growth numbers.
LCV domestic
14,301
17,517
7.5
-18.4
159,647
232,238
-31.3
PV domestic
13,047
10,974
8.4
18.9
105,274
114,490
-8.0
3,961
3,824
0.1
3.6
40,589
40,068
1.3
42,582
40,481
2.0
5.2
405,453
475,456
-14.7
Total two-wheelers
Three-wheelers
Overall sales
Exports
Total
YoY
(%)
YTD
FY15
YTD
FY15
451,208
88,444
Sharp fall in the moped segment.
Issues in key export markets results in a
sharp fall in growth rates.
The LCV segment continues to decline,
pain in the < 2mt vehicle category.
Expect the segment to bottom out in the
coming months.
Incremental volumes from the newly
launched Bolt and Zest push up
volumes. The UV segment continues to
decline for the company.
Export volumes unpredictable and
continue to fluctuate.
Contd....
Sector Update
2
February 02, 2015
sharekhan
Sector Update
Company-wise dispatches for January 2015 (units)
M&M
Jan-15
Jan-14
MoM
(%)
YoY
(%)
YTD
FY15
YTD
FY14
YoY
(%)
Comments
UV+Verito
18,804
19,792
8.6
-5.0
170,888
186,414
-8.3
The fall in passenger vehicle segment
volumes lower than anticipated.
Demand for Scorpio and Bolero
supporting overall volumes.
4,526
4,710
10.1
-3.9
47,800
51,585
-7.3
Decline in the three-wheeler segment
largely due to a high base.
12,919
15,100
5.9
-14.4
132,750
145,237
-8.6
Demand for low tonnage vehicle (sub
2mt) continues to remain weak, demand
in 3.5mt vehicle category flat.
796
722
-5.6
10.2
7,104
6,453
10.1
A marginal player in the segment;
growth due to the low base and
improvement in sentiment for the
sector.
37,045
40,324
7.5
-8.1
358,542
389,689
-8.0
2,885
2,361
54.4
22.2
23,051
23,686
-2.7
Total automotive
39,930
42,685
9.9
-6.5
381,593
413,375
-7.7
Tractors-domestic
13,852
19,389
22.7
-28.6
199,498
224,147
-11.0
1,061
720
-10.7
47.4
10,836
8,222
31.8
Total tractors
14,913
20,109
19.6
-25.8
210,334
232,369
-9.5
Maruti
Jan-15
Jan-14
MoM
(%)
YoY
(%)
YTD
FY15
YTD
FY14
YoY
(%)
Comments
Mini—Alto, Wagon R
35,750
38,565
3.2
-7.3
345,595
358,605
-3.6
Demand for vehicles in the entry level
segment yet to pick-up meaningfully.
Compact—Swift, Ritz,
Celerio, Dzire
45,881
42,669
10.5
7.5
414,511
350,409
18.3
Recently launched refreshed Swift as
well as incremental volumes from the
launch of Celerio driving volumes.
Super compact—
Dzire Tour
1,378
1,036
-17.8
33.0
13,474
7,437
81.2
Dzire Tour volumes increase due to
demand from commercial usage.
Mid size—Ciaz
6,005
191
60.9
3044.0
23,490
3,390
592.9
0
0
NA
NA
0
1
NA
89,014
82,461
9.1
7.9
797,070
719,842
10.7
6,432
4,763
11.4
35.0
56,117
49,389
13.6
Ertiga driving volumes for the company
in the segment.
10,113
9,345
-6.1
8.2
105,904
82,431
28.5
Shift in demand in favour of petrol
models driving volumes for the company
in the segment.
105,559
96,569
7.6
9.3
959,091
851,662
12.6
11,047
5,847
-5.4
88.9
103,217
80,925
27.5
116,606
102,416
6.2
13.9 1,062,308
932,587
13.9
Three-wheeler Alfa
Pick-ups and SCVs
Truck and bus
Total auto - domestic
Exports--M&M
Tractors-exports
Executive—Kizashi
Total passenger cars
UVs—Grand Vitara,
Gypsy, Ertiga
Vans—Omni, Eeco
Total domestic sales
Export
Total sales
Growth in exports due to low base
effect.
Sentiment for the tractor segment
continues to remain weak after a
deficient monsoon rainfall across the
country.
Growth in exports due to low base
effect.
Dispatches of the Ciaz, launched in
October, continue to remain strong. Not
comparable on a Y-o-Y basis.
Healthy growth in volumes in nonEuropean export markets.
Contd....
Sector Update
33
February 02, 2015
sharekhan
Sector Update
Company-wise dispatches for January 2015 (units)
Ashok Leyland
Jan-15
Jan-14
MoM
(%)
YoY
(%)
YTD
FY15
YTD
FY14
YoY
(%)
Comments
MHCV sales
8,005
5,530
11.0
44.8
59,393
47,008
26.3
Impressive growth in the heavy vehicle
segment. A highly depleted base of last
year inflating the growth numbers.
LCV sales
2,634
2,317
26.6
13.7
21,995
24,093
-8.7
Some rebound seen in LCV volumes for
the company.
Total sales
10,639
7,847
14.5
35.6
81388
71101
14.5
Eicher Motors
Jan-15
Jan-14
MoM
(%)
YoY
(%)
YTD
CY15
YTD
CY14
YoY
(%)
Comments
3,262
2,608
-3.7
25.1
3,262
2,608
25.1
Pick-up in demand in the heavy
commercial vehicle segment after two
years of decline. Exports remain strong.
Motorcycles
28,927
20,232
1.0
43.0
28,927
20,232
43.0
The strong momentum in Royal Enfield
volume continues.
Escorts
Jan-15
Jan-14
MoM
(%)
YoY
(%)
YTD
FY15
YTD
FY14
YoY
(%)
Comments
3,223
4,695
12.3
-31.4
50,084
57,386
-12.7
Sentiment for the tractor segment
continues to remain weak after a
deficient monsoon rainfall across the
country.
146
47
-2.7
210.6
2,028
763
165.8
Growth in exports due to low base
effect.
3,369
4,742
11.5
-29.0
52,112
58,149
-10.4
CVs
Tractors-domestic
Tractors-exports
Total tractors
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Sector Update
4
February 02, 2015