At first glance, April sales figures of most Indian auto firms suggest a change from the normal trend. Contrary to the cyclical dip seen in April after robust sales from January to March, this time round companies have turned in a better performance.
In April, Maruti Suzuki India Ltd’s volumes shot up by 30% year-on-year to 93,058 vehicles. The highest growth rate was in Omni vans, which grew by 38%. Domestic sales were 23% higher.
Among two-wheeler makers, Bajaj Auto Ltd registered its highest ever monthly sales at 313,000 in April, around 85% higher than the year-ago period. Sales were flattish at Hero Honda Motors Ltd, mainly on account of a strike in Exide Batteries Ltd factory, which constrained two-wheeler despatches.
Likewise, Mahindra and Mahindra Ltd’s (M&M) volumes rose 22% to 42,347 units, driven by a 13% rise in the automotive segment and a 40% growth in farm equipment.
Tata Motors Ltd, too, sold 57,202 vehicles, a whopping 52% higher over the year-ago period.
Although the numbers look promising, a closer look shows that the high growth rate is a reflection of a low base effect. One must remember that the auto industry was just inching out of recession in the first quarter of fiscal 2010.
What surprised the street, however, was the relatively lower decline in sales numbers on a month-on-month basis during April 2010.
Historically, sales volumes in April decline by 20-25% over March. But, Maruti registered flattish domestic sales. Bajaj Auto registered a phenomenal 14% jump in total volumes; the trigger was a 75% jump in exports.
Of course, the two-wheeler firm Hero Honda posted a 10% lower sales on a month-on-month basis. Likewise, M&M sales declined by around 12% in April from March, while Tata Motors fell by 24%. Sales of the medium- and heavy-duty trucks fell harder by 37%.
The high sales figures in April were actually a spillover from the excellent sales in the March quarter. An Antique Research report said: “Supply could not meet all of this demand due to capacity constraints and component shortages. As a result, for some OEMs (original equipment manufacturers), higher April volumes were a function of pending orders from March.”
High sales have rubbed off on stock prices. Tata Motors is up 8.5% from 1 April, at Rs842 apiece. Bajaj Auto is trading 3.7% higher at Rs2,070 each. Hero Honda shares are steady at Rs1,945 each despite the flat volumes.
Will this trend continue? In the next two months, some companies might make up for lost production. This will help companies maintain the sales momentum. And, with most dealers having low inventory positions, despatches from OEMs will be higher.
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