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 Volumes: Back on track! - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Sep 27, 2005

    Auto Volumes: Back on track!

    The month of August'05 had been good for the automobile industry, which registered all-round growth in the domestic market. It should be noted that during the first four months of the current fiscal, though industry witnessed a 10% YoY volume growth, the performance of various segments had been mixed. While two-wheeler continued to grow at steady rate, passenger cars registered a mere 3% YoY increase. In this article, we shall see how the market leaders have performed in the month of August'05.

    Sectoral picture...

    Domestic Sales Aug-04 Aug-05 YoY change
    Passenger vehicles 81,327 92,632 13.9%
    Commercial vehicles 23,268 27,503 18.2%
    Two/Three wheelers 216,372 258,079 19.3%
    Total 320,967 378,214 17.8%
    We would start our analysis by saying that auto demand has certain degree seasonality and therefore, month-on-month and quarter-on-quarter volume comparisons do not make much sense. Though the passenger vehicle segment has under-performed the industry growth, the rate of growth is much higher than that in the first four months (April'05 to July'05). The performance of the commercial vehicles (CVs) has been largely aided by 32% YoY growth in the light commercial vehicles (LCVs), while the medium and heavy commercial vehicles (M&HCV) grew by 9%. The demand for two/ three wheelers continued to be buoyant, led by motorcycles.

    How the leaders have performed...

    Domestic Sales Aug-04 Aug-05 YoY change
    Passenger vehicles
    Maruti 37,660 41,717 10.8%
    Tata Motors 11,611 13,879 19.5%
    M&M 11,484 11,623 1.2%
    In the passenger car segment, Maruti continued its subdued performance primarily due to falling demand for its cash cow 'Maruti 800', which registered a negative growth of 18% YoY. However a 27% YoY growth in the B segment (Alto, Zen, Wagon R, Swift) enabled the company to restrict the fall in the demand of 'Maruti 800'. Tata Motors continued to outperform due to unavailability of an alternative option to its diesel based 'Indica'. For M&M, excluding 'Scorpio', the performance is rather muted (volumes down 28% YoY, excluding 'Scorpio').

    Domestic Sales Aug-04 Aug-05 YoY change
    Commercial Vehicles
    Tata Motors 13,682 17,070 24.8%
    Ashok Leyland 3,440 4,406 28.1%
    In the commercial vehicle segment, though Tata Motors volumes grew by 25% YoY, it has been largely led by a 70% YoY growth in LCVs. Its M&HCV volumes growth at 5% YoY, continued to be subdued when compared to that of the industry and peers. On the other hand, Ashok Leyland continued its robust growth in the month of August 2005. It should be noted that the demand for company's M&HCV has grown by around 20% during April'05 to August'05.

    Domestic Sales Aug-04 Aug-05 YoY change
    Two/Three Wheelers
    Bajaj Auto 126,420 163,388 29.2%
    Hero Honda 187,267 238,104 27.1%
    TVS Motor 85,046 96,633 13.6%
    In the two-wheeler segment, Bajaj Auto leads the pack. During the period April'05 to August'05, while the domestic demand registered a 13% YoY increase, Bajaj Auto managed to achieve a 31% YoY growth. This has been the outcome of a number of new launches during last 15 months. Hero Honda, after registering a 10% growth in volumes till July'05, bounced backed with a strong 27% growth. This is partly also due to law base effect in July'04. Against monthly average volumes of 215,000 units in FY05, in July'04, the company managed to sold only 187,000 units. For TVS Motor, falling demand for mopeds (accounting 20% of the total sales) continued to suppress its overall performance. However, in the motorcycle segment, company registered a 23% YoY growth.

    To conclude...
    We feel that the performance of the industry in the first four months were an aberration. Our observation is based on the premise that incidents that affected the automobile industry during this period were largely non-recurring in nature. To give a perspective, FY06 began with confusion over emission norms (for CVs) and VAT related issues. Similarly, the demand in the month of July was depressed due to flood like situation in Gujarat and Maharashtra, two of the largest markets for manufacturers. With fundamentals of the economy intact and industrial activity expected to be buoyant, we do not foresee any significant change in the demand pattern across the various segments.



    Equitymaster requests your view! Post a comment on "Auto Volumes: Back on track!". 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

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    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.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    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.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    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 18, 2017 (Close)