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Auto sector: PVs to see positive traction on onset of festive season

Motilal Oswal | 29 Sep, 2015  | Follow Author | Add to my Favourites 
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PVs to see positive traction on onset of festive season  


Deficient rainfall of ~13% on PAN India basis to hit Tractor and 2W sales


Automobiles - Update


We interacted with industry participants to get an update on the expected sales trend for the month of September 2015 for our Auto coverage universe. Key highlights:

- In PVs, demand momentum to remain strong, with increase in number of enquiries (on back of new launches and festive season) leading to higher sales. Discounts have marginally inched up to ~INR17k for players like MSIL, especially in the petrol segment. For M&M discounts continue to remain high at INR40k-70k per unit, but M&M to benefit from recently launched TUV-3OO.

- The entry level segment is expected to witness some positive momentum on back of recently launches Renault Kwid. New launches from Honda (Jazz) has waiting period of 2 months, Hyundai (Creta) waiting period between 2 months and MSIL (S-Cross) waiting period of 1.5 month would drive demand in the compact-SUV and premium hatchback segments. 4W OEMs to have built up inventory for festive season resulting in inventory of ~5 weeks for most of the companies.

- In 2Ws, domestic demand momentum is likely to remain subdued on back of deficient rainfall of ~13% in PAN India. This would have particularly affected entry-level motorcycles. Motorcycle inventory for HMCL and HMSI is at 5-6 weeks. 

- In the urban regions, demand momentum remains strong for scooters, partly insulating most 2W players from the slowdown in rural demand. For BJAUT, its newlylaunched Pulsar series continues to witness good response, with waiting period of one month.

For most of BJAUT dealer’s inventory has gone up marginally above 30 days due to festive season onset.

- M&HCVs would continue to see recovery on the low base of last year, driven by replacement demand and pre buying on back of new safety regulation that come into effect from 1 st  October 2015. While LCV demand remains under pressure, the pace of decline has slowed down considerably. We expect LCVs to witness recovery during 2HFY16.

- Our top picks are MSIL, BJAUT and TTMT among large caps, and TVSL, EIM and AL among midcaps.

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About Motilal Oswal

Motilal Oswal was founded in 1987 as a small sub-broking unit, with just two people running the show. Today it has a 2000 member team with a networth of Rs7 bn and market capitalization as of March 31, 2008 at Rs19 bn.


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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.