CorporateAuto sales: Growth story continues
Although growth was helped by the low base of last year, monthly sales suggest the recovery is turning stronger.
- Daimler to launch Mitsubishi Fuso trucks in India - Robust auto sales hold promise of good economic showing - Maruti"s car sales up 60% in November - Racing ahead - Bajaj to ramp up Pulsar production - Auto sales zoom in Oct
Auto companies posted robust sales for yet another month on the back of benign interest rates, new launches, stimulus packages and an improving economy. To some extent, the growth rates appear high due to the low base of last year, when auto sales had fallen consequent to the global and domestic credit crisis.
India’s largest commercial vehicle (CV) producer, Tata Motors, had seen a 60 per cent decline in sales of medium and heavy CVs (M&HCV) in November 2008. Thus, its year-on-year sales growth of 116 per cent for November 2009 looks astonishing. However, although Tata Motors’ M&HCV sales at 12,507 might still be away from the peaks seen in 2008, the 5 per cent rise in month-on-month sales suggests the country’s economic activity is improving. The company’s LCV sales were up 62 per cent. Analysts suggest that CV sales in the next few months should continue to be strong due to last year’s low base and an improving economic outlook.
In the car segment, since the major producers had reported a year-on-year decline of about 20 per in November last year, the 64 per cent growth in sales at 1.54 lakh units in November 2009 looks good. But, what’s noteworthy is that monthly sales of Maruti are at their new high and close to the peak for Tata Motors, indicating the strong underlying demand. Maruti’s November sales also got the benefit of capacity expansion at one of its plants and the company’s move to replenish inventory to normal levels. For Tata Motors, car sales (at 18,480) got a boost from sale of 3,406 units of Nano, which was launched in July this year, and the recently launched Manza. Nevertheless, even after excluding Nano, the monthly figures are higher by about 21 per cent. A demand revival in overseas markets also helped the companies report robust growth in exports.
In the motorcycle segment, Bajaj’s strategy of focussing on “sportier” bikes like Pulsar and Discover helped improve domestic sales. Likewise, its focus on overseas markets saw exports rise to their highest level of over 98,000 units. On December 9, Bajaj will launch a new sub-150 cc Pulsar in a bid to intensify growth rates. For Hero Honda, year-on-year sales were up 32 per cent. Sequentially also, volumes grew 8 per cent, as there were no production issues at its component suppliers. This had hurt production in October.
The sector is seen sustaining growth in future as well. The improving sentiments have already resulted in the BSE Auto index outperforming the Sensex over the last one year as well as in the last two days. Analysts expect auto stocks to perform in line with the markets and as long as sales continue to improve.