With volumes continuing to grow at a robust pace and companies effecting price hikes on the back of a sustained demand, auto majors are likely to register 30-35 per cent growth in revenues and profits for the June quarter. The economic recovery and consequent robust demand has helped bring back pricing power to a sector that was struggling a year ago with dropping sales, rising inventory levels and low capacity utilisation.
Almost all companies have been able to increase prices by three-five per cent in the June quarter. What has enabled this is the strong growth in volumes that companies registered over the last three months. While there are some concerns regarding higher raw material and fuel costs, some of the auto majors - like Maruti, Hero Honda and M&M - are expected to churn better numbers.
Robust June numbers
Listed auto majors carried their performance of 30 per cent volume growth recorded in the first two months of the quarter into June. This came despite the period being seasonally weak and auto companies facing production constraints. While part of the reason for the good performance was due to the low-base effect, the continuing strong economic recovery, growing rural demand and availability of credit seems to have played its part in ensuring higher numbers.
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GOING STRONG
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Sales in units
|
10-Jun
month
|
% chg*
|
% chg#
|
10-Jun
quarter
|
% chg*
|
|
Bajaj Auto
|
315,422
|
63.30
|
5.00
|
928,336
|
69.50
|
|
Hero Honda
|
426,454
|
16.60
|
-2.20
|
1,234,039
|
10.30
|
|
M&M
|
44,152
|
7.10
|
-3.50
|
132,093
|
24.30
|
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Maruti Suzuki
|
88,091
|
17.30
|
-13.80
|
283,324
|
25.00
|
|
Tata Motors
|
67,730
|
49.20
|
19.30
|
181,711
|
47.60
|
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TVS Motors
|
159,688
|
37.40
|
1.30
|
463,834
|
32.80
|
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* % chg is y-o-y; # % chg is m-o-m Source: Analyst reports
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Healthy exports, new product launches and rural demand saw the two-wheeler sector grow 33.5 per cent over the June 2009 quarter with listed two-wheeler makers recording their highest ever sales. What stands out, according to Pinc Research, is that scooter sales are growing at 45 per cent from the year-ago period and now contribute a significant 17 per cent of overall two-wheeler volumes. While passenger and utility vehicle makers also saw good growth rates, despite maintenance shutdowns, commercial vehicle manufacturers continue to benefit from the uptick in industrial activity.
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