Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Auto sector: FY01 roundup - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • May 23, 2001

    Auto sector: FY01 roundup

    FY01, was a tough year for the automobile sector as demand in almost all segments has reported a decline. On the costs side too the sector faced rough weather as competition has gone up in the industry coupled with higher emission expenses as well as rising marketing costs. This culminated in falling margins for the industry.

    This dismal performance has been discounted by the stock markets as all the auto bigwigs have seen a significant decline in their valuations. On the brighter side, the auto sector has attracted buying interest recently, even though volumes have yet to show signs of any improvement. The reason being brighter prospects for agriculture growth.

    In the two wheeler segment even though motorcycles grew by a robust 20% in FY01, scooters reported a decline of 28% YoY and mopeds a fall of 5.3% YoY. The market share of motorcycles went up to 58% during the year, while that of scooters fell to 24% and mopeds to 18%. The two wheeler industry is showing signs of slowdown in the rural markets since the past few months as motorcycle segment growth was lower in 4QFY01.

    The passenger car segment reported an overall decline of 7.5% YoY. The small car players faced higher competition during the year. Maruti and Telco reported a drop in volumes, while Hyundai and Daewoo reported some growth in volumes in the small car segment. Maruti Udyog's market share fell from 63% in FY00 to 58% in FY01. The medium sized car segment did well in FY01 although on a smaller base, as new variety of models were introduced during the year.

    The commercial vehicles (CVs) segment reported a decline of 12.3% YoY in volume due to lower industrial and agricultural sector growth, which was further aggravated by rising fuel costs and sales tax rationalisation. In the M & HCVs segment the decline was steeper at 21.3% in FY01 after a robust growth of 33% in FY00. In this, the truck segment suffered more, while the bus segment got some relief due to stricter pollution norms. In Delhi, the Supreme Court has ordered that all buses plying should be run on CNG latest by September 2001. As a result the demand for CNG buses has recently gone up.

    The LCV segment grew by 4.5% YoY in FY01. Though this was lower than previous year's growth at 6.9%, atleast this sector reported positive growth. The companies that did well in this segment are Eicher Motors and Swaraj Mazda.

    The decline in agricultural production in FY01 coupled with rising inventory levels in the industry lead to a 9.3% YoY (April-February 2001) fall in volumes for the tractor industry. In this segment, Mahindra & Mahindra (M & M) made major gains in market share due its aggressive marketing stance. The prospects for this sector are expected to pick up towards the latter half of FY02. The reason being expectations of a good monsoon which may result in higher demand from the agriculture sector.

    Auto volumes hit a spead breaker
      FY00 FY01 % change
    M & HCVs 111,350 87,588 -21.3%
    LCVs 60,173 62,864 4.5%
    Utility Vehicles 123,471 126,953 2.8%
    Cars 638,792 590,647 -7.5%
    Scooters 1,253,969 901,877 -28.1%
    Motorcycles 1,796,734 2,156,032 20.0%
    Mopeds 726,075 687,635 -5.3%
    Three wheelers 202,255 207,118 2.4%
    Tractors* 232,524 210,841 -9.3%
    * figures are for April-February 2001

    In the utility vehicles segment, the entry of Toyota Qualis provided some relief to urban utility vehicle volumes. Toyota Qualis sold 25,375 vehicles during FY01 as compared to 3,519 vehicles in FY00 and was the only company in this sector to witness a positive growth. Though Telco's total volumes in this segment declined by 3.3% in FY01, its domestic volumes reported marginal improvement.

    Though all these figures seem disheartening for shareholders of automobile stocks, it is important to see how the future prospects are expected to be. The reduction in excise duty for some segments, coupled with higher import duty on second hand cars and higher import duty on new CBUs in the car and two wheeler segment are likely to help demand prospects of the domestic industry.

    However it all depends on economic growth during the year, and all eyes are set on the forthcoming monsoons. In the likelihood of a normal monsoon one can expect the latter half of FY02, to see some improvement in demand for the auto sector. Also the government's efforts towards improving infrastructure will help the sector. Auto sector report FY01



    Equitymaster requests your view! Post a comment on "Auto sector: FY01 roundup". Click here!


    More Views on News

    Tata Motors Ltd: Another Disappointing Quarter, Management fails to Perform! (Quarterly Results Update - Detailed)

    Aug 14, 2017

    Tata Motors Ltd disappoints again for both India and JLR business. Management commentary indicates a slow year ahead.

    Maruti Suzuki Ltd: Bumpy First Quarter. GST dents Margins! (Quarterly Results Update - Detailed)

    Aug 2, 2017

    GST realted cost impacts Margins, Management expects good year ahead.

    Hero Motocorp Ltd: Riding on the Scooters Growth, Maintains Margins! (Quarterly Results Update - Detailed)

    Aug 1, 2017

    Good Recovery in the Scooters market, expects pick up in exports too.

    Bajaj Auto Limited: Recovery in Exports but Domestic Disappoints! (Quarterly Results Update - Detailed)

    Aug 1, 2017

    New Export Markets picking up, Management expects good recovery in domestic Three wheeler market.

    Bajaj Auto Limited: Finishes the Year with Headwinds. Poised for a Recovery Ahead? (Quarterly Results Update - Detailed)

    Jul 6, 2017

    Ends the year on a Flat note. Expects good recovery in the exports market.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 22, 2017 (Close)