Monthly auto sales update for May 2012: SPA Research

Auto sales moderated in May on account of lower footfalls, hike in petrol prices & slowing consumption. Sales in M&HCVs continued to remain under pressure due to poor macro-economic indicators reflecting weak industrial cycle. Tata Motors saw a steep fall in M&HCV sales for second consecutive month. LCVs saw good volume off-take due to pent up demand from tier-2 & tier-3 cities. Demand in 2-wheelers & Passenger vehicles were also sluggish. M&M & Hero Moto Corp reported strong set of numbers with growth of 19% & 11% YoY respectively. Total sales in May 2012 were up by 3.7% YoY & down by 1.1% MoM.

Outlook: In May 2012, sales of Commercial vehicles grew by 12% YoY & 11% MoM, led by strong growth from LCVs segment. Passenger vehicles sales were almost flat on YoY basis & were down by 2% on MoM basis. Sales in UV's continued their strong growth momentum. In 2-wheelers segment, sales grew by 5% YoY & were down by 1% MoM. Excluding Hero Moto, sales have degrown by 1% YoY & 4% MoM. 3-wheelers segment yet gain posted a dismal set of numbers due to no new permits being allowed & slowing exports to key market viz. Srilanka, leading to sales de-growing by 24% YoY & 20% MoM. Demand for tractors picked up a little from May with expectations of normal monsoons. Tractors industry is now expected to grow by 5-6% vis-à-vis earlier expectation of 8% in FY13. We expect growth in auto industry to pick-up in 2HFY13 & grow by 10-11% in FY13.

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