Auto Monthly - August 2013

Ashok Leyland Ashok Leyland (AL) witnessed a steep decline of 18.3% mom in its total sales to 7,139 units led by the weak demand environment amidst slowdown in the economic activity. While medium and heavy commercial vehicle (MHCV) sales posted a decline of 21.1% mom; Dost sales too posted a decline of 11.3% mom during the month. On a yoy basis too, total sales declined by 24.3% with MHCV and Dost sales registering a decline of 25.1% and 22.4% yoy respectively. Bajaj Auto Bajaj Auto recorded an in-line volume growth of 11% mom to 312,188 units led by a 12.9% mom growth in the motorcycle sales primarily driven by the exports. Total exports surged sharply by 31% mom during the month. The threewheeler sales however declined 2.6% mom as the sales continue to be impacted due to the slowdown in Egypt. Domestic sales too declined by 1.9% mom due to the weak demand for motorcycles. On a yoy basis, total sales posted a decline of 9.5% yoy following a 21.2% decline in domestic volumes. Exports however, registered a growth of 9.6% yoy. The company has launched new three-wheelers in an attempt to progressively replace the entire portfolio over the next 3-4 months. Further, the company also intends to launch new variants of Discover around the festival season. Hero MotoCorp Hero MotoCorp (HMCL) registered lower-than-expected volumes in August 2013 as volumes continue to be impacted by the slowdown in motorcycle demand and higher competition from Honda. Overall sales declined 5.7% mom to 459,996 units. However, on a yoy basis, the sales grew by 3.6% primarily due to the base effect. Going ahead, the company expects better monsoons to revive growth during the festival season. Mahindra and Mahindra Mahindra and Mahindras (MM) tractor sales came in lower-than-expected at 14,158 units, down 23.3% mom as domestic sales declined by 23.8% mom during the month. However on a yoy basis, tractor sales grew by 7% yoy led by a 9.3% yoy growth in domestic sales driven by good monsoon and improved prospects for kharif crop. Meanwhile, the company has reached an agreement on the wage settlement issue with the workers at the Nashik plant after negotiating for almost a year. According to the media reports, the company will give an average wage hike of `9,300/ month to all its 2,950 permanent employees at the facility and the union has agreed to scale up production by 18% in a quid-pro-quo arrangement. The Nashik plant employs around ~4,000 workers, out of which ~1,000 are on contract basis, and produces models like Bolero, Scorpio, Xylo Quanto and Verito. Maruti Suzuki Maruti Suzuki (MSIL) registered a better-than-expected volume growth of 4.8% mom to 87,323 units driven by a strong 38.6% mom growth in exports. The domestic volumes though grew modestly by 1.2% mom and were led by a strong 25.4% mom growth in the compact segment. The utility vehicle sales of MSIL have slowed down considerably over the last few months due to the increasing competition from Renault and Ford and also due to the slowdown in demand for diesel vehicles post the recent hike in the fuel prices. On a yoy basis, total sales registered a growth of 61.2% yoy primarily due to the low base of last year. The companys sales in August 201 2 were impacted due to the labor problems at the Manesar plant which had led to temporary shutdown in production. Mr. Yaresh Kothari (Research Analyst - Automobile, Angel broking)