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Auto Sales Number Update - June, 2014 - Sector Update




Kisan Ratilal Choksey Shares and Securities Private Limited


15 Jul 2014





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Auto Sales Number Update – June, 2014 - Sector Update “Revival Hopes Alive!!!” Industry Bottoming out of the downtrend for the auto sector is visible with volumes seeing an uptrend in past two months. This could be partially led by customer rushing to buy a vehicle before the lapse of the excise duty cut that was to end on 30 June 2014. With May recording high volumes June was expected to follow. the finance minister has extended the excise duty cut till the end of the calendar which will further boost the consumer sentiments. The Industry awaits the budget eagerly where it expects measures of infrastructure reforms which will help in ballooning of volumes. 2-W & 3-W Segment: The 2 wheeler sector continues to grow backed by buoyant demand for scooters which has staged a magical comeback from the brink of extinction from the Indian markets. Scooters have grown to constitute a fourth of the two wheeler market and may rise to 30% in a few years. The two wheeler market leader Hero posted growth of 8%Y-o-Y to 541594 units; Bajaj Auto grew by 3% to 262202 units, TVS Motors by 23% to 193758 units, while biggest surge was seen in Honda of 28% growing from 251936 units in June13 to 323224 units in June14. Sequentially volumes were lower due to huge demand surge in May. In the premium bike segment, Eicher motors owned, Royal Enfield saw huge demand for its products with volumes growing by 83% from 13806 units in June-13 to 25303 units in June-14. This is largely attributed to the commencement of the new plant at Oragadam that begun production and deliveries which has considerable reduced the waiting period from 8-9 months to 4-5 months. 3-wheeler sales saw an uptrend mainly due to the increase in exports and fears of rollback of excise duty cut. The three wheeler volumes for Bajaj Auto increased by 5%Y-o-Y and 13%M-o-M to 43263 units while TVS reported 24%Y-o-Y growth to 8419 units. Three wheelers have seen a buoyant demand surge from the export markets particularly African nations and Bajaj has been a key beneficiary. Four Wheeler & CV Segment: The domestic PV segment for the second strainght month is seeing buying which consumers making most of excise duty cut benefits boosted by discounts offered by car makers. Maruti’s sales zoomed past the 1lakh mark fueled by the mini segment which increased by 52%Y-o-Y and 63%M-o-M to 47618 units with WagonR recording highest ever sales taking maruti’s total tally to 112773 units which is an increase of 33%Y-o-Y and 12%M-o-M. Exports for the company increased by 58%Y-o-Y and 14%M-o-M to 11809 units. Tata Motors continues its rough PV journey with sales beaten and battered down to 8218 units down by 33%Y-o-Y and 13% M-o-M. On the CV front, Tata Motors recorded total CV sales of 30339 units down by 25%Y-o-Y. While the country’s second largest commercial vehicle maker posted volumes of 7452 units up by 7%Y-o-Y and 12%M-o-M. Both the CV makers have seen sequential uptick in volumes suggesting bottoming out of downtrend in the CV cycle. Sector Overview Segment Jun-14 Jun-13 Y-o-Y May-14 M-o-M Bajaj Auto 305,465 295749 3% 351,436 -13% Hero MotoCorp 541594 502279 8% 602481 -10% Maruti Suzuki 112773 84455 34% 100925 12% Tata Motors 38557 52708 -27% 37525 3% TVS Motors 202177 164128 23% 210293 -4% Ashok Leyland 7452 6970 7% 6632 12% Source: Company, KRChoksey Research Outlook: With the budget around the corner, bold reforms are expected from the new Government which will strengthen the economy. The inf...

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