Sector Update: Auto

Sector Update: Auto

The recovery being witnessed in the Automobile Sector over the past few months has started gaining momentum with most players clocking healthy growth in volumes indicating our positive view on the Sector.

Lower interest rates, government stimulus packages, reduction in Excise Duty rates towards the early part of the year and growing presence of the players in the rural markets has aided this recovery in industry volumes.

Among the players, Hero Honda (HH) and Maruti Suzuki (Maruti) continued their good performance in July 2009 as well, registering 30.4% and 33.4% y-o-y growth in volumes respectively, highlighting their extensive market reach in both rural and urban markets.

Meanwhile, Mahindra & Mahindra (M&M) overall recorded better-than-expected growth at 36.4% y-o-y aided by the 22% y-o-y growth registered in its automotive segment on the back of the 56.4% y-o-y jump in its utility vehicle (UV) sales to 16,688 units and coupled with the whopping 71.9% y-o-y growth in the tractor segment.

However, expansion in M&M volumes was partially punctured owing to the dip in Export volumes in both its segments. Tata Motors (TML) reported 18% y-o-y growth in total volumes for July 2009 on the back of the 20.2% growth recorded in its commercial vehicle (CV) Segment.

The company’s medium and heavy commercial vehicle (M&HCV) Segment sales also turned around for the first time in the last year. TML’s PV Segment clocked 14.4% y-o-y growth for the month.

In the Two-wheeler Segment, HH once again turned in a good performance registering a healthy 30.4% y-o-y growth in July 2009 to 366,808 units, while TVS Motor (TVS) recorded a moderate 2.1% y-o-y growth to 120,994 units (118,545).

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