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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