Auto sales volume continued the momentum of good performance post an excellent sequential growth registered in the last three months, receiving a boost from the stimulus package announced by the government in December 2008.
Pre-Election demand has been the primary driver of growth during April 2009. Hero Honda and Maruti extended their good performance in April 2009, with volumes growing 29.5% and 15.1% y-o-y respectively indicating strength of their market reach and better performance by the Rural segment.
M&M volumes also improved on utility vehicles (UV) volume buying before the Elections. Tata Motors too reported positive 9% growth in its Domestic Commercial Vehicle (CV) Segment.
In fact, April 2009 was the first month since September 2008 that the company registered a y-o-y increase in CV sales volume.
Overall, the Auto Industry has exhibited a positive trend in Volume growth over the last three months.
We believe that the upward trend will be confirmed with the companies reporting a gradual positive trend in volumes over the next couple of months.
We remain positive on overall prospects of the Indian Auto Sector. We prefer stocks, which are better placed to combat the economic slowdown.
However, most of the Auto stocks have registered a sharp run up in the last two months.
We advise investors to ACCUMULATE the stocks at lower levels keeping in mind the industry’s prospects beyond FY2010. Among the pack, we prefer Maruti and M&M.