This week saw auto companies scramble to get rid of old generation Bharat Stage IV (BS-IV) stock before the March 31 deadline. The sector was already reeling under the weight of the slowdown. But how has this disruption played out on the stock and the market cap of all the listed companies? In today’s auto wrap of the week we check out this impact. But first here is the list of all the major news of the week in the automotive sector.
Great Wall Motors to make India debut next year
In a first for the Indian market, Great Wall Motors, one of China's biggest automotive companies, is looking to make its bow here with a hybrid version of a SUV. The launch is slated for next year.
The company is actively exploring the idea of launching a plug-in hybrid version of its SUV along with petrol and diesel variants. The SUV will be launched under the Haval brand.
Car sales hit new monthly low in March
The 21-day nationwide lockdown has resulted in the automotive industry recording one of its worst monthly sales performances in March.
Sales of India’s top six cars and SUV makers slumped by nearly half, following a government order to stop production, supplies and sales. Sales of the top six manufacturers slumped 48 percent year-on-year (YoY) to 1.28 lakh during March.
MG Motor India offers to produce ventilators
SAIC-controlled MG Motor India on April 2 said it will produce a ventilator prototype at its plant in Halol, Gujarat, which presently makes the Hector SUV.
The Delhi-based company has 'started the hunt for a quick-to-produce ventilator design to serve the patients affected by the coronavirus (COVID-19) pandemic'.
Two-wheeler sales plummet in March
Two-wheeler sales hit a new low with manufacturers keeping their plants shut simultaneously in March when dealers were asked to close following a nationwide 21-day lockdown.
Sales of India’s top four two-wheeler makers -- Hero MotoCorp, Honda Motorcycle and Scooter India (HMSI), Bajaj Auto and TVS Motor Company, who control nearly 90 percent of the domestic market, plummeted nearly 40 percent YoY to 7.54 lakh units.
Tata Motors’ performance car JV on backburner
A Tata Motors-promoted joint venture company - created to produce performance-oriented, low volume versions of its existing models - may have ceased in less than three years of starting operations.
JT Special Vehicles, a 50-50 joint venture company between Tata Motors and Coimbatore-based Jayem Automotives - founded by former race car driver J Anand, was set up in March 2017
Mahindra board rejects fund infusion in Ssangyong
The board of Mahindra & Mahindra (M&M) decided that there will be no fund infusion into its Korean subsidiary SsangYong Motor Company (SYMC) as a result of the worldwide disruption caused by COVID-19.
The board of M&M held a special meeting held on April 3 to review investments in SsangYong and discuss the approach to capital allocation. M&M has been trying to find new investors for SYMC since the last few months after failing to turn around the latter's loss-making operations since its acquisition 10 years ago.
Slump in auto sector as gauged by stock market
In three months the BSE Auto Index has slumped 45 percent, higher than the 33 percent decline marked by the benchmark BSE Sensex during the same period. From 18,310 points at the close of January 3, the BSE Auto Index collapsed to 10,269 as recorded on April 3.
The free fall in share prices of these auto companies including that of four companies that are part of the 30 stock Sensex have sent their market caps haywire. As a result some interesting findings have cropped up.
With compounding troubles at Jaguar Land Rover (JLR), the stock of parent company Tata Motor has slid the most during the past three months among the BSE listed vehicle manufacturing companies. From Rs 191 Tata Motors stock price has fallen 66 percent to Rs 65 in the last three months.
At the same time Pune-based maker of Pulsar motorcycles Bajaj Auto has remained the least affected of the lot. During the last three months Bajaj Auto’s stock has recorded a fall of 34 percent in line with the fall of the SENSEX.
Closely following Bajaj is rival Hero Motocorp. The Delhi-based company’s stock price has fallen 35 percent during the same three months. But troubles for both Bajaj and Hero are equally severe.
Half of Bajaj’s sales come from exports but with the closure of production shipping of vehicles to overseas markets are impossible, thereby impacting sales. For Hero there was a huge overhang of about 1.5 lakh units, comprising more than one-third of its monthly sales, of unsold BS-IV two-wheelers. Yet the fall in their stock prices are not as severe as some of their peers.
Interestingly, market cap of Eicher Motors is now higher than that of Tata Motors. Both companies have significant revenues coming from legacy brands that are at least seven decades old. For Tata Motors it is JLR while for Eicher Motors it is Royal Enfield.
Eicher Motors market cap as of April 3 on the BSE stood at Rs 34,586 crore while that of Tata Motors stood at Rs 23,491 crore. In fact three companies that make two-wheelers are ahead of Tata Motors in market cap.
Since the erosion in stock price of Tata Motors was the steepest its market cap has also eroded up to that extent compared to market caps of other auto companies. The market cap of auto component maker Bosch is now higher than Tata Motors.
Despite a 45 percent fall in stock price Maruti Suzuki remains the most valued automobile stock with a market cap of Rs 1.21 lakh crore, more than double compared to the second most valued stock Bajaj Auto at Rs 58,834 crore.
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