Automobile monthly sales update for March, 2012

PINC Research has come out with its report on automobile monthly sales. The research firm believes demand for petrol vehicles would remain subdued in FY13 too and growth would be largely driven by the diesel variants. 
The automobile industry had a bumper end to an otherwise somber FY12 as passenger vehicle segment volumes during the month of Mar'12 crossed the 300k mark. The growth was spurred by customers rushing to complete purchases before the widely expected excise duty hike in the Union Budget. Manufacturers too delayed price hikes to pass on the duty hike by a couple of days. Market leader Maruti Suzuki (MSIL) took an average price increase of ~1.75% across its portfolio, while dispatches in March were up 3.3% to 126k units. The company is entering a new segment with the launch of the utility vehicle Ertiga in the second week of April and this would provide incremental volumes in FY13. Across the passenger vehicle industry, most manufacturers posted record volumes during the month.

Mahindra & Mahindra (M&M) auto division dispatches were at an all time high of 47k units, up 25.2% YoY. However, the tractor division volumes continued to remain subdued with a 12.3% fall to 17.4k units. The mood for the two wheeler manufacturers was different with the exception of Honda Motorcycle and Scooters (HMSI). Volumes for the company surged 49.8% to 220k units strengthening its bid to challenge Bajaj Auto in the domestic market for the number two spot. Hero Motocorp volumes were flat at 528k units while TVS Motor continues to be a laggard with a 4.5% decline in volumes to 183k units. Bajaj Auto volumes were up 9.6%, however the growth was entirely led by the exports.

Two-wheelers: The two wheeler industry crossed the 15mn mark in FY12. While Hero Motocorp continues to lead the pack, Bajaj Auto and HMSI would slug it out for the second spot. A lack of capacity could however play a spoilsport for HMSI. TVSL meanwhile looks drugged.

Passenger Vehicles: The passenger vehicle industry had a forgetful FY12 as high interest rates and rising fuel prices kept the customer cautious. Only a bout of pre-buying ahead of the budget helped the industry close in the green.

Commercial Vehicles: FY12 was mixed for the top two players in the industry. While Tata Motors consolidated its position as marketleader in both MHCV and LCV segment. Ashok Leyland on the other hand suffered due to weakness in key markets.

Our Viewpoint: The expected increase in excise duty has given a boost to volumes in Feb-Mar'12. We expect a softening in demand in the month of Apr-May'12 as an after effect due to this pre-buying. A possible steep hike in petrol and diesel prices could further aggravate the situation. However, a reduction in interest rates in the system would provide a boost to sentiment. We believe demand for petrol vehicles would remain subdued in FY13 too and growth would be largely driven by the diesel variants. 

Public holding more than 90% in Indian cos

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.

To read the full report click on the attachment

Read More