Pre-budget buying boosts auto sales: Angel Broking

Angel Broking has come out with its report on auto sector. Automobile sales surged at a brisk pace in March 2012 with passenger vehicles (PV) reporting healthy growth aided by pre-budget buying in anticipation of excise duty hike in Union Budget 2012-13.

Automobile sales surged at a brisk pace in March 2012 with passenger vehicles (PV) reporting healthy growth aided by pre-budget buying in anticipation of excise duty hike in Union Budget 2012-13. The light commercial vehicle (LCV) segment sustained its strong momentum; however, tractor and two-wheeler demand was impacted by slowdown in rural markets. Among auto majors, Tata Motors (TTMT) and Mahindra and Mahindra (MM, automotive division) reported better-than-expected volume growth; however, TVS Motor (TVSM) and Bajaj Auto (BJAUT) registered weak performance during the month. Going ahead, while we expect LCV sales to sustain their growth momentum, two-wheeler and tractor segments are expected to continue reporting moderate volumes. We also expect revival in PV sales to continue with the likely easing of interest rates going ahead.

TTMT registered a strong 20.5% yoy increase (9% mom) in total sales, which came in slightly ahead of our estimates. Growth was driven by better-than-expected growth in the commercial vehicle (CV) and passenger vehicle (PV) segments. The CV segment grew by 12.8% yoy (10.3% mom), driven by impressive 29.5% yoy (8.9% mom) growth in the LCV segment. In the PV segment, Nano volumes jumped by 20% yoy, while Indica sales grew by robust 65%, led by strong demand for diesel models.

Maruti Suzuki (MSIL) reported in-line growth of 3.3% yoy (5.9% mom) in total volumes to 125,952 units, driven by strong growth in the recently launched Swift and Dzire volumes. Additionally, pre-budget buying by consumers in anticipation of excise duty hike and availability of additional diesel engines benefited the company

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