M&M, Apollo Tyres top picks in auto space: Dolat Capital

Dolat Capital's report on auto sales volume - May 2013

The Indian car market sluggishness continued in May 2013 with sales declining for the seventh straight month despite newer launches and higher discounts. With the rising inventory (avg. inventory up by 8-10days), the OEMs may be forced to cut production. Car sales in May fell 12 percent YoY. In May 2013, Maruti Suzuki reported monthly sales at ~85,000 cars (including exports). While domestic sales were down 13 percent YoY, exports declined 27 percent YoY. Maruti gained market share in the passenger car segment from 43.8 percent in May 2012 to 48.6 percent in May 2013. In the utility vehicle (UV) segment, its market share declined from 16.7 percent in May 2012 to 11.6 percent in May 2013. In the multi-purpose vehicle (MPV) segment, its market share declined from 57.3 percent in May 2012 to 48.2 percent in May 2013. This share was gained by M&M and Tata Motors. Honda Cars India sold a total of 12080 cars on the continued success of its first diesel offering ‘Amaze’. With the price differential tapering lower between petrol and diesel prices, the company saw a revival in its Honda City sales. Ford India’s Figo continues to lose its momentum. YoY sales are down 26 percent selling from ~4,700 cars to ~3,500 a month. Hyundai Motors exports were up 5 percent to ~25,000 cars in May 2013. Its domestic car sales growth was flattish YoY to ~32,000 cars. In the super-compact segment, Maruti Dzire continued to dominate the sales with ~17,300 cars sold in May 2013, flattish growth YoY. However, it became the highest selling model of Maruti ahead of Alto and WagonR. Toyota sold ~2,100 cars of its newly launched Ethios sedan. In the mid-size segment, Tata Motors registered a 86 percent YoY decline in its sales of Tata Indigo and Manza in May 2013. General Motors sold ~2,000 vehicles of its Aveo and Sail, up 95 percent YoY. The newly launched Skoda Scala managed a volume of 670 units in May 2013 In the utility vehicle (UV) segment, M&M retained its market leader position, and increased its market share from 49.3 percent to 49.5 percent YoY. It sold more than 20,800 vehicles in May 2013. Renault Duster continues to gain market share. The company sold ~5,100 vehicles in May 2013, up 300  percentYoY. Maruti Ertiga registered a decline for the first time after its launch. The company sold ~4,300 vehicles in May 2013 versus ~7,700 sold in May 2012. The commercial vehicle (CV) segment registered a 10 percent YoY decline in May 2013. While growth in the M&HCV segment declined 17 percent YoY, the light commercial vehicle (LCV) segment registered a 7 percent YoY decline in sales. Ashok Leyland disappointed with sales down 16 percent YoY to ~6,500 vehicles in May 2013. Its market share declined from 13.1 percent in May 2012 to 11.5 percent in May 2013. Tata Motors’ sales were down 18 percent YoY. Its market share declined from 54.3 percent in May 2012 to 52.1 percent in May 2013. M&M registered a 13 percent YoY growth in monthly sales. Its market share was up ~400bps to 21.8 percent in May 2013. In the three-wheeler segment, growth in the passenger carrier sub-segment and the goods carrier segment both declined 3 percent YoY. Bajaj Auto enhanced its market share from 39.4 percent in May 2012 to 41.9 percent in May 2013. In the domestic two-wheeler segment, scooters grew 13 percent YoY, motorcycle sales growth was flat and mopeds declined 16 percent YoY. In the motorcycle segment, Hero’s market share stood at 53.6 percent, down 340bps. In the scooter segment, Hero’s share was up 450bps to 21.1 percent in May 2013. All segments continue to witness pressure due to thicker competetion, rising fuel prices and a high base effect, We expect slow down to continue in the coming months. Our top picks continue to be M&M and Apollo Tyres. Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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