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Feb 08, 2013, 02.24 PM IST | Source: Moneycontrol.com

RBI cuts rate, auto industry ready for boom: Ventura

Ventura has come out with its report on auto sector. According to the research firm, auto industry experts believe that the worst is over with auto loans becoming cheaper following the Reserve Bank of India (RBI) reducing its key lending rate. Believe this move is likely to spur buying and translate into better volumes in the near future.

Ventura has come out with its report on auto sector. According to the research firm, auto industry experts believe that the worst is over with auto loans becoming cheaper following the Reserve Bank of India (RBI) reducing its key lending rate. Believe this move is likely to spur buying and translate into better volumes in the near future.

The New Year failed to bring any signs of end to the sluggish demand for cars as most of the car manufacturer registered stagnant sales in January'13. This was primarily backed by high interest rates and price hikes that dissuaded buyers from making purchases, leading to a 13% fall in January car sales. Tata Motors was this month’s worst performer with sales declining 29.5% yoy. The country's largest car maker, Maruti Suzuki reported a 1.06% decline in January 2013. Over the same period Mahindra and Mahindra registered a growth of 11%. In the two wheeler segment, the market remained muted with TVS Motor  registering a marginal growth of 1.4% YoY and Hero Motocorp recording a sales growth of 7.2%. Bajaj Auto , the country's second largest two wheeler maker reported a 3% growth over the same period.


Outlook-Neutral:

Despite reporting muted volumes for January'13 backed by high interest rates, the industry is now hoping for some respite from growth oriented measures in the Union Budget which is to be announced on February 28th. Besides, industry experts believe that the worst is over with auto loans becoming cheaper following the Reserve Bank of India (RBI) reducing its key lending rate. We believe this move is likely to spur buying and translate into better volumes in the near future.

Maruti Suzuki India:

Maruti Suzuki’s total sales increased by 20% MoM (down -1% YoY) to 1,14,205 units in the month of January 2013 led by growth in the compact segment and UVs + vans. The company’s total compact segment (DZire, Swift, Estilo, Ritz) sales grew by 19% YoY and 15% MoM to 41066 units. It has recorded domestic sales of 1,03,026 units compared to 1,01,047 units, registering a growth of 2% on YoY basis. Its total passenger car sales in the domestic market grew marginally to 88,557 units from 88,377 units in the same month of 2012.

In the mini-segment, (inclusive of M800, A-Star, Alto and WagonR), the company recorded a decline of 10.68% to 46,479 units during the month from 52,036 units in January’12. Over the same period exports were down 22.29% yoy to 11,179 units. 

Mahindra and Mahindra:

On account of the robust performance in the Passenger vehicles segment (including UVs and Verito), M&M reported a volumes growth of 11% YoY (+9.3% MoM) to 49,503 units. The company’s PV segment witnessed a growth of 33% YoY to 26,555 vehicles despite exports dipping by 50.36% to 1,662 units on a YoY basis.

On the other hand, M&M’s LCV segment de-grew by 33.6% YoY (+ 62.3% MoM) to 1,024 vehicles, while the 3 wheeler segment declined by 5.14% to 5,811 vehicles on a YoY basis. Tractor sales fell by 8.62% during the month at 16,402 units as against 17,950 units on YoY basis. However, we believe there could be recovery in tractors sales backed by the favourable base effect and prospects of a healthy rabi crop. Ssangyong Motors (SYMC) reported 29% YoY volume growth to 10,620 units. We expect Sangyong to continue to do well backed by new product launches in FY13.

Tata Motors:

Tata Motors recorded a steep decline of 29.5% YoY (-6.0% MoM) to 61,660 units in the first month of year 2013 backed by the macro economic factors affecting demand. However, LCV segment continued its strong performance and grew 24% YoY to 33,849 units.

In the commercial vehicles segment, the company's sales dipped by 6.87% to 42,571 units compared to 45,713 units in the corresponding period last year. Slowdown in industrial activities continued to drag the M&HCV segment. Sales from M&HCV de-grew by 52% YoY. Exports at 3,880 units were down by 45% YoY. In the same period, the total passenger vehicle sales in the domestic market stood at 15,209 units, down 56.13% from 34,669 units in January’12.

Hero Motororp:

Hero MotoCorp recorded its highest monthly sales of 5,57,797 units, registering a growth of 7.21% on a YoY basis. Its recently launched Ignitor and Passion X-Pro are receiving excellent customer response. While in the scooters segment Hero Motocorp is outpacing the industry growth backed by strong performance of its Pleasure & Maestro brands. The management is setting up its fourth manufacturing plant and the Global Parts Centre (GPC) at Neemrana in Rajasthan at a total investment of Rs 550 crore.

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