May 3, 2017 - impacted), Tata Motors, Ashok Leyland witnessed a slump in sales in April. M&M's Auto business was imp
rd
3 May 2017
Auto-Roundup April 2017
Mixed bag… March witnessed a late spurt in volumes post Supreme Court’s judgement of banning BS III engine vehicles. Most of the OEMs impacted due to this ban incurred price hikes to the tune of 8-10%. 2W makers and CV players were among them. Post this, April witnessed some softening in volumes for such OEMs. Companies like Hero Motocorp (maximum impacted), Tata Motors, Ashok Leyland witnessed a slump in sales in April. M&M’s Auto business was impacted due to lack of new products and competition. Bajaj Auto and TVS reported a strong bounce back in exports performance which needs to be monitored for consistency. MSIL with Ignis launch posted a record high domestic growth across the segments, surpassing market expectations. Similar story was emulated by TaMo’s PV business, which was buoyant on the recent launches of Tiago, Hexa and Tigor. Tractor makers continued their robust run even after posting a strong 23% growth in FY17. Among the 2W pack, we like Hero (55% of rural volumes) which is a proxy to the rural story and is expected to pan out well on expected good monsoons, upcoming wedding season, 7th Pay Commission and slurry of new launches as announced by the management. At current levels it’s an attractive buying opportunity on long term point of view as we believe that though the company is in trouble ( may take a hit on profitability in Q4 post offering significant discounts on BS III vehicles) will bounce back post bearing this one time loss. Bajaj Auto has been witnessing some pressure in the domestic markets on the back of DeMon, and in April it got impacted along with industry which was troubled due to BS III ban. However, since February, we have seen a strengthening trend reversal in exports for both Bajaj as well as TVS. We need to wait and watch for consistency hereon. 3W business is uncertain as it solely depends on permits opening. We like MSIL on its sheer market leadership strength, new launches in the UV and the premium car segment, its image of a car made for India, solid distribution network and lesser impacted due to DeMon and BS III ban. With its recent new launches like Baleno, Vitarra Brezza, Supper Carry LCV and Ignis hatchback, we remain sanguine on MSIL. The upcoming launches of Baleno RS and new Swift coupled with new capacity at Gujarat coming up, we believe the volumes will touch higher orbit (already at a high of 1.5 mn in FY17). We like Ashok Leyland as it’s a prime beneficiary of the CV cycle up move, which may restart with expected good monsoons and infra cycle pick up. We also like M&M now as it has been performing well on the high margin FES businesses. We currently remain Neutral on TaMo on its JLR hedging issue. Apr-17
Mar-17
% mom
Apr-16
% yoy
Hero Motocorp
591,306
609,951
-3.1%
612,739
-3.5%
Bajaj Auto
329,800
272,197
21.2%
330,109
-0.1%
TVS
246,310
256,341
-3.9%
227,096
8.5%
Maruti
151,215
139,763
8.2%
126,569
19.5%
M&M
65,358
75,368
-13.3%
63,249
3.3%
Auto
39,357
56,031
-29.8%
41,863
-6.0%
Tractors
26,001
19,337
34.5%
21,386
21.6%
30,972
57,145
-45.8%
39,382
-21.4%
Ashok Leyland
7,083
18,682
-62.1%
10,182
-30.4%
Escorts
4899
7079
-30.8%
4086
19.9%
Tata Motors
Ashwin Patil
[email protected] +91 22 6635 1271
LKP Research
Auto-Roundup
Hero MotoCorp: BS III ban leads to demand gap down
Hero MotoCorp (Hero)’s sales in April went down by 3.5% yoy at 591,306 units. This fall was led by the implementation of BS !V norms from the 1 of April, which led to a price hike of Rs 500- Rs 2,200, also to accommodate for the RM price hike.
Sequential de-growth was 3.1%, which was also due to the same reason.
Going forward, we expect a slight lull in remaining Q1, but upcoming wedding season and any possibility of a good monsoon may help the further revival.
st
Total sales
Apr-17
Mar-17
% mom
Apr-16
% yoy
YTD FY18
YTD FY17
% yoy
591,306
609,951
-3.1%
612,739
-3.5%
591,306
612,739
-3.5%
Bajaj Auto: Trend reversal seen, need to wait before turning positive on exports
Bajaj Auto’s total sales came in flat yoy while growing 21.2% mom to 329,800 units.
Domestic motorcycle sales have shown de-growth of 19.2% yoy. However, on a mom basis, they grew by 6.9% on Dominar launch (3,000-4,000 per month). The yoy fall in domestic markets was due to spurt in sales at the end of March due to implementation of BS IV norms. Management expects this trend to normalize May onwards.
Exports 2W surprisingly grew by a whopping 44.3% yoy to 132,002 units which was a growth of 42% mom. This was a straight third month of 2W exports growth. This growth has come on the back of strong growth in Nepal, Bangladesh, Philippines and South Asia., Africa and Latin America are stabilizing now. We need to wait and watch for consistency in the ensuing couple of months to turn positive on this business and the stock.
Total three wheeler sales fell by 6.1% yoy while growing 21.2% mom. In the domestic markets they decreased by 37.9% yoy, while in the exports markets sales grew by 59.1% yoy. The commercial vehicle sales included few units of the quadricycle ‘Qute’ in the exports markets. Apr-17
Mar-17
% mom
Apr-16
% yoy
YTD FY18
YTD FY17
% yoy
Domestic
161,930
151,449
6.9%
200,433
-19.2%
161,930
200,433
-19.2%
Exports
132,002
92,786
42.3%
91,465
44.3%
132,002
91,465
44.3%
Total
293,932
244,235
20.3%
291,898
0.7%
293,932
291,898
0.7%
Domestic
15,957
17,830
-10.5%
25,700
-37.9%
15,957
25,700
-37.9%
Exports
19,911
10,132
96.5%
12,511
59.1%
19,911
12,511
59.1%
Total
35,868
27,962
28.3%
38,211
-6.1%
35,868
38,211
-6.1%
Domestic
177,887
169,279
5.1%
226,133
-21.3%
177,887
226,133
-21.3%
Exports
151,913
102,918
47.6%
103,976
46.1%
151,913
103,976
46.1%
Total
329,800
272,197
21.2%
330,109
-0.1%
329,800
330,109
-0.1%
Motorcycles
3W
LKP Research
April 2017
Auto-Roundup
TVS Motor: Stable performance
Total sales grew by 8.5% yoy to 246,310 units in April. Despite the March effect of BS III ban, the company performed well.
Motorcycle sales grew 10.4% yoy and 4.4% mom, now shrugging off the impact of BS III ban.
Scooters sales grew by 28.6% yoy and declined by 3.2% qoq.
3W sales increased by 11.7% yoy as domestic as exports markets for 3W remained surprisingly looked strong at 28.1%, while domestic 3W declined by 46%
Exports sales in TVS too witnessed a positive growth like Bajaj Auto. Exports surprisingly grew by 41.9% yoy and 4.6% mom to 40,221 units despite weakness in Africa and Latin America, driven by a 43.9% growth in 2Ws and 28.1% growth in 3W. The South and South East Asian countries Nepal, Bangladesh and Philippines were the bright spots in this month. Apr-17
Mar-17
% mom
Apr-16
% yoy
YTD FY18
YTD FY17
% yoy
Motorcycles
99,890
95,671
4.4%
90,491
10.4%
99,890
90,491
10.4%
Scooters
81,443
84,173
-3.2%
63,341
28.6%
81,443
63,341
28.6%
Mopeds
59,674
71,135
-16.1%
68,518
-12.9%
59,674
68,518
-12.9%
Total 2W
241,007
250,979
-4.0%
222,350
8.4%
241,007
222,350
8.4%
5,303
5,362
-1.1%
4,746
11.7%
5,303
4,746
11.7%
246,310
256,341
-3.9%
227,096
8.5%
246,310
227,096
8.5%
40,221
38,462
4.6%
28,354
41.9%
40,221
28,354
41.9%
2W exports
35,485
33,984
4.4%
24,658
43.9%
35,485
24,658
43.9%
3W exports
4,736
4,478
5.8%
3,696
28.1%
4,736
3,696
28.1%
567
884
-35.9%
1,050
-46.0%
567
1,050
-46.0%
3W Total sales Exports out of the above
Domestic 3W
LKP Research
April 2017
Auto-Roundup
Maruti Suzuki: Unbelievable consistency
Maruti Suzuki India Ltd (MSIL)’s sales in the month of April (which is seasonally weak) came in at 151,215 units which was robust growth of 19.5% yoy, and 8.2% mom.
The petrol/small car segment this month saw 21.9% yoy growth.
The super compact segment comprising of Swift, Celerio, Baleno, ignis etc expanded by 39.1% yoy on Ignis success.
Ciaz segment sales grew by 23 % yoy and 43% mom as Ciaz is now sold through Nexa outlets.
The UV segment which increased by a whopping 28.6% yoy and 12.7% mom also remained one of the main drivers of growth. Long waiting orders for Vitarra Brezza was the main contributor to this kind of growth.
The new launch of LCV Super Carry sold 411 units in as compared to 304 units last month.
Exports witnessed a volatile performance with de-growth of just 29.4% yoy.
This has been a very consistent performance by MSIL over the past few months. Apr-17
Mar-17
% mom
Apr-16
% yoy
YTD FY18
YTD FY17
% yoy
Mini(Alto, Wagon R)
38,897
30,973
25.6%
31,906
21.9%
38,897
31,906
21.9%
Compact(Swift, Ritz, Celerio, Baleno, Dzire, Ignis)
63,584
60,699
4.8%
45,700
39.1%
63,584
45,700
39.1%
-
1,166
-100.0%
3,173
-100.0%
-
3,173
-100.0%
7,024
4,918
42.8%
5,702
23.2%
7,024
5,702
23.2%
109,505
97,756
12.0%
86,481
26.6%
109,505
86,481
26.6%
Utility Vehicles(Gypsy, Ertiga, Vitarra, S-Cross, Brezza)
20,638
18,311
12.7%
16,044
28.6%
20,638
16,044
28.6%
Vans(Omni, Eeco)
13,938
11,628
19.9%
14,520
-4.0%
13,938
14,520
-4.0%
LCV (Super Carry)
411
304
35.2%
-
-
411
-
-
144,492
127,999
12.9%
117,045
23.4%
144,492
117,045
23.4%
6,723
11,764
-42.9%
9,524
-29.4%
6,723
9,524
-29.4%
151,215
139,763
8.2%
126,569
19.5%
151,215
126,569
19.5%
Super compact(Dzire Tour) Mid size (SX4, Ciaz) Total passenger cars
Total domestic sales Exports Total sales
LKP Research
April 2017
Auto-Roundup
Mahindra & Mahindra: Tractors continue their great run…
Total auto sales in the month of April de-grew by 6% yoy to 39,357 which was a steep fall of 29.8% sequentially.
SUV segment fall was at 14.5% yoy and 22.9% mom. This was due to lack of any new product and intense competition.
CV sales in the month surprised us by growing 16.4% yoy, out of which LCV >3.5 T dropped by 33.2% yoy (albeit on a low base), while the LCV
