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: The month that was... - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Dec 7, 2006

    Auto: The month that was...

    November auto sales numbers are out and riding on the back of continued strength in the economy, robust growth has again been witnessed practically across all the segments. Let us see how the major companies have performed in the domestic market during the month. We have considered three major segments; two-wheelers, passenger vehicles and commercial vehicles.

      Nov-06 Nov-05 % change Apr-Nov 2006 Apr-Nov 2005 % change
    Two- wheelers            
    Hero Honda 273,058 244,895 11.5% 2,156,134 1,917,667 12.4%
    Bajaj Auto 214,329 167,188 28.2% 1,669,060 1,326,236 25.8%
    TVS Motor 110,657 107,163 3.3% 983,775 828,873 18.7%
    Passenger vehicles (cars + UVs)            
    Maruti 52,574 43,568 20.7% 395,090 337,512 17.1%
    M&M 10,250 8,929 14.8% 76,704 72,626 5.6%
    Tata Motors 19,475 13,126 48.4% 140,495 114,473 22.7%
    Commercial vehicles            
    Ashok Leyland 6,420 4,033 59.2% 47,278 33,887 39.5%
    M&M 684 502 36.3% 5,362 4,769 12.4%
    Tata Motors 25,793 17,694 45.8% 183,519 124,739 47.1%

    Two-wheelers: Bajaj Auto, the second largest manufacturer in the country has once again led the growth in the segment. A YoY growth of 28% in its two-wheeler portfolio is way ahead of its closest rival Hero Honda, where volumes growth stood at 12%. TVS Motor, the third largest player could manage a modest growth of just 3.3% during the same period. As far as sales of motorcycles is concerned, Bajaj Auto's performance has been even more impressive as sales grew by 36% YoY. TVS Motor's performance on the other hand loses further sheen if one considers just motorcycles, where growth has been a marginal 1%.

    While market leader Hero Honda continues to dominate the executive segment with its immensely successful Splendor, it is the entry level segment and the premium segment where it is facing the pressure from Bajaj Auto. The latter's 'Platina' in the entry level and 'Pulsar' in the premium segment have once again notched up impressive sales numbers and were instrumental in the industry outperformance of the company. In order to wean away some market share from 'Pulsar', Hero Honda recently launched a new bike in the premium segment, whose performance has been impressive but it would be too early to comment whether it will make successful inroads into 'Pulsar's' market share.

    Passenger vehicles: November has been another good month for the passenger vehicle industry. Led by 32% growth in the compact car (A2) segment and a 36% growth in the C segment, market leader Maruti sold 21% more vehicles in November than it managed same period last year. While Maruti's performance was impressive, the show stealer for the month however was Tata Motors, the home grown auto major, where volumes spurted 48% YoY. Registering the highest ever sale in a month, the flagship car 'Indica' sold 58% more units and along with its utility vehicles (UVs), 'Sumo' and 'Safari', where volumes climbed 46% YoY, remained instrumental in the stellar performance of the segment. On the other hand, lack of passenger cars in its portfolio seemed to have hurt M&M, India's largest UV producer, as a 15% volume growth although impressive, was the slowest among the three players.

    Going forward, new launches are going to be the order of the day as these companies brace themselves for increasing competition from both existing players as well as new entrants. Cash resources are hence likely to be strained.

    Commercial vehicles: The uptrend in sales in this segment has continued for the fifth year in a row and the month of November was no exception. Leading the list was Ashok Leyland, India's second largest CV manufacturer, whose sales were a huge 59% higher over November 2005. For the company, while the growth in the passenger segment continued to decline (21% fall), sales in the goods segment more than doubled. The industry is going through a structural shift where high tonnage vehicles are increasingly in demand owing to their better economies of scale and certain regulatory compulsions. This segment is Ashok Leyland's forte and quite rightly, it has been able to seize the initiative here. With growth of 45%, market leader Tata Motor's CV sales have also been impressive. However, unlike Ashok Leyland, the growth has been led by LCVs, where volumes remained higher by 69%. Tata Motors too is benefiting from a structural shift, but the one that is taking place in the LCV segment. The need for last mile connectivity has seen a spurt in demand for small tonnage vehicles (< 4 tonnes). Tata Motors has a model called 'Ace' targeted at this segment, which has been immensely successful and has been a key force behind the company's new found success in LCVs.

    As far as future is concerned, we believe such a magnitude of growth is unsustainable in the long-run and soon the industry should return to a more normal 7%-8% growth rate. Further, entry of new players should result in market share pressure for Tata Motors and Ashok Leyland.

    On the YTD performance front, another strong month has meant that the industry has inched closer to capping off what could be another memorable year. However, when one considers value instead of volumes, not every company is likely to be the beneficiary. As mentioned in previous write-ups, in these trying conditions, the company (be it in the two-wheeler or four-wheeler segment), which is able to sweat its assets more and hence generate more cash from operations, will be able to weather the storm better. Higher amount of cash will ensure that the company's balance sheet is strong enough to fund new models, a key to survival in a competitive environment. Therefore keep an eye on the cash that the company generates internally and base your investment decisions accordingly.



    Equitymaster requests your view! Post a comment on "Auto: The month that was...". Click here!


    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    You've Heard of Timeless Books... Ever Heard of Timeless Stocks? (The 5 Minute Wrapup)

    Aug 19, 2017

    Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.

    Why NOW Is the WORST Time for Index Investing (The 5 Minute Wrapup)

    Aug 18, 2017

    Buying the index now will hardly help make money in stocks even in ten years.

    Trump Takes a Beating (Vivek Kaul's Diary)

    Aug 18, 2017

    Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.

    How To Read Your Mutual Fund Account Statement Correctly (Outside View)

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    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)