We believe that the market will continue to support the emerging trends: strong growth in commercial vehicles (CV) on the back of a good monsoon and increased production of BS-IV compliant vehicles.
As against last year when the festive season was largely restricted to October, this year, the festive season was spread between September and October. This led to muted volume growth for auto majors as a result of the high base of last year.
We believe that the market will continue to support the emerging trends: strong growth in commercial vehicles (CV) on the back of a good monsoon and increased production of BS-IV compliant vehicles; signs of revival in three-wheeler sales following government’s decision to end Permit Raj and pick-up in exports on the back of improving global climate.
We believe that most of the regulatory headwinds are waning and the situation is coming back to normalcy. A near normal monsoon, rural demand and government’s capex push are tailwinds to watch for.
Tata Motors registered a flat growth; however, the management indicated that the M&HCV (Medium and Heavy CVs) will continue to witness a strong pick-up in demand on the back of government’s infrastructure funding. Additionally, the SCV (small CV) cargo and pickup segments will also continue the growth momentum due to new product launches of the XL range of Tata Ace and Tata Xenon Yodha pickup.
M&M posted a healthy growth (on a low base) thanks to good monsoon, festive season and rural penetration of the company. Eicher Volvo also witnessed a healthy growth of 16.1 percent (YoY) in the month. Numbers for Ashok Leyland was a tad muted.Cars Segment – leader continued its mojo
Maruti continued to top the chart in PVs (passenger vehicles) segment with 10 percent growth, mainly driven by 29.8 percent growth in UV (utility vehicle).
The disappointment for the month came from Tata Motors, which posted flat numbers in the segment with 22.5 percent decline in PVs but a strong growth of 162.9 percent in UV segment driven by the newly launched compact SUV Nexon.Mahindra and Mahindra (M&M) continued to struggle and posted 5.4 percent decline (YoY) in PV.
Two-wheeler (2W) segment: TVS and Bajaj are gaining momentum
In the two-wheeler space, Eicher continued its dream run and witnessed strong sales of bikes above 350cc with a growth of 8.7 percent (YoY) after witnessing a decline for long.
TVS posted a muted growth in 2W segment primarily because of 15.4 percent decline in mopeds. Bajaj’s domestic business was also flat in terms of 2W (two-wheeler) volume.Hero, a formidable player in 100/110cc bikes, posted a decline of 4.8 percent in the month, primarily because of the early festive season this year and a large base of last year.
Three-wheelers (3W): the leader posted strong numbers
The three-wheeler segment continued to show traction as is evident from the sales number for October. With the end of “Raj Permit” in Maharashtra and new 10,000 permits in Delhi, the overall three-wheeler market is showing significant improvement. Bajaj Auto, the leader in the space, posted a strong 38.3 percent (YoY) growth in the 3W segment.TVS also posted a strong growth of 88.3 percent (YoY) in 3W volumes whereas Atul Auto continued to face challenges and witnessed a decline of 31 percent (YoY) in 3W volumes.
Tractors: gaining on the back of good monsoon
Escorts continued to post healthy growth in tractor sales, primarily driven by normal monsoon and rural penetration.M&M, however, posted a decline of 10.9 percent (YoY). The management has guided to domestic industry growth of 12-14 percent for this year.
Exports: early signs of improvement
Auto companies had been struggling in the export markets for long. However, going by the monthly numbers, there appear to be signs of normalcy. TVS and Bajaj yet again witnessed a strong growth in their exports. Eicher witnessed a significant growth of 97.6 percent. Escorts also continue to gain momentum in the exports market.
Bajaj Auto’s performance was on the back of stabilising currency and retail sector in Nigeria. The management also mentioned that geographies like Philippines, Latin America, Egypt, East Africa, and Nepal have stabilized.However, Tata Motors and M&M continue to face pressure on foreign roads.Moneycontrol Research Page.