Failed to connect to MySQL: Too many connections Motown in fast lane as sales so far have defied 'demon' effect - Moneycontrol.com

Motown in fast lane as sales so far have defied demon effect

Amid speculations of the adverse impact of demonetisation on the economy, three of the four automobile companies that reported November monthly sales numbers seemed to have either positively surprised or posted in-line results.
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Dec 02, 2016, 11.03 AM | Source: Moneycontrol.com

Motown in fast lane as sales so far have defied 'demon' effect

Amid speculations of the adverse impact of demonetisation on the economy, three of the four automobile companies that reported November monthly sales numbers seemed to have either positively surprised or posted in-line results.

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Motown in fast lane as sales so far have defied demon effect

Amid speculations of the adverse impact of demonetisation on the economy, three of the four automobile companies that reported November monthly sales numbers seemed to have either positively surprised or posted in-line results.

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Amid speculations of the adverse impact of demonetisation on the economy, three of the four automobile companies that reported November monthly sales numbers seemed to have either positively surprised or posted in-line results.

Contrary to expectation, India’s largest car maker Maruti Suzuki reported 12.2 percent year-on-year increase in total sales to 1.35 lakh units helped by high waiting period in some of its latest hot-selling models like Vitara Brezza and Baleno.

Pranoy Kurian of IDBI Capital Markets & Securities estimates nearly 20 percent of Maruti’s volumes is fairly immune to the currency crunch situation. The company, he told CNBC-TV18 in an interview today, is extending various offers like zero or cashless down payments to help ease payment glitches for the balance 80 percent.

Mahindra & Mahindra , on the other hand, saw its auto sales dip 22 percent YoY to 32,499 units. The company’s management blamed it on a shift in festive season and demonetization. M&M’s tractor business was also under severe pressure.

Sales numbers of Eicher Motors , the manufacturer of high-end Royal Enfield motorcycles, also did not reflect any impact of demonetisation. In fact, Royal Enfield surprised with total sales jump of 41 percent YoY to 57,313 units in November. The point to be noted in these numbers, according to Kurian, was the jump in sales of motorcycles over 350cc, which is usually muted.

Exports, which remained unaffected by the 'demon effect', showed a strong growth. For M&M exports increased 22 percent to 2,687 units in the month gone by. Similarly, Royal Enfield saw its exports rising a whopping 222 percent year-on-year to 1,470 units.

Commercial vehicles was one of the segments that was expected to be hit the most. However, even that segment seems to have dodged it at least in the month under question with Ashok Leyland  reporting 7 percent YoY.

However, it now remains to be seen if the awaited numbers of the remaining auto companies -- TVS, Hero, Bajaj and Tata Motors --  prove to be equally positive. As Sanjeev Prasad, Senior Executive Director and Co-Head of Kotak Institutional Equities says depending on which segments one is looking at, there could be an impact on an average of about two to three quarters.

In an interview to CNBC-TV18 earlier today, Prasad said commercial vehicles (CV) could see a more lasting impact as a lot of freight operators will have to review their business models as to whether they want to continue in their old model of dealing in black, in cash or want to become part of the formal economy. This will mean freight tariffs have to go up and it is not easy to raise tariffs at a time when demand environment is not very conducive anywhere.

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Motown in fast lane as sales so far have defied demon effect

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