Auto monthly sales number: A promising beginning

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Auto monthly sales number: A promising beginning

PINC Research has come out with its report on auto monthly sales number. The research firm is neutral on auto space and top picks are M&M, Bajaj Auto.

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PINC Research has come out with its report on auto monthly sales number. The research firm is neutral on auto space and top picks are M&M , Bajaj Auto .

The passenger vehicle industry maintained the momentum generated during the previous month to start CY12 on a positive note. The industry kicked of the year with its bi-annual flagship event i.e. the Auto Expo at New Delhi and the response to the event and products showcased was encouraging. While OEMs undertook price hikes during the month, the effect of the same on January dispatches was not visible. Market leader Maruti Suzuki undertook a price hike to the tune of 0.5-3.5% across products with the steepest hike on the popular diesel products. The company reported a positive volume growth in dispatches after a hiatus of seven months. Mahindra & Mahindra (M&M) reported a robust growth of 22% in the automotive segment aided by incremental volumes of the XUV5OO. Meanwhile tractor volumes for the company disappointed for the third month in a row. Tata Motors passenger vehicle volumes continued to surpass our estimates, growing 15.5%. Commercial vehicle dispatches for both Tata Motors as well as Ashok Leyland showed a healthy uptick. Dispatches for major two wheeler manufacturers baring Honda Motorcycle & Scooters India (HMSI) fell short of our estimates, albeit marginally.

Two-wheelers: Dispatches for all the three incumbents were below estimate. HMCL volumes declined 3.7% MoM. The pressure on TVS Motor's scooter segment was clearly visible as it reported a flat growth against HMSI's 59% volume increase. Bajaj Auto launched the KTM Duke 200 and showcased the new Pulsar 200NS during the month.

Passenger Vehicles: Maruti Suzuki returned to positive volume growth to shed aside the labour issues which haunted it during CY11. M&M reported a healthy growth on the back of the new launches. Tata Motors put in a spectacular performance with all time high volumes for the Indigo and impressive performances from all other platforms.

Commercial Vehicles: The industry continued to post a high single digit growth. With the peak season ahead, manufacturers have built on inventory levels.

Our Viewpoint: The passenger car industry reported a positive growth despite the price hikes taken. All eyes will now be on the Union Budget with a hope that the Finance Minister would avoid an increase in the excise rates. Any increase would be hard to digest for the industry clawing back to positive territory. Two wheelers have had a dream run for the last two years and a correction in growth rates is bound to set in. We maintain a 'Neutral' stance on the sector and our top picks are Mahindra & Mahindra and Bajaj Auto.

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To read the full report click on the attachment