Auto sector: A mixed bag


What’s happening in the auto sector is evident from the manner in which they report numbers. Those who have seen a deceleration in sales have only reported absolute sales numbers for the month of November, while those who have clocked good growth have gone to town with it. Maruti Suzuki's communiqué, for instance, merely says it sold a total of 91,772 vehicles in November, which includes 8,902 units for export. Domestic sales have fallen 19.2 per cent annually. While this was expected due to the production problems at its factory, analysts believe it will continue to post weak numbers in the second half, too.

Going forward, analysts expect the current trends to hold up. However, growth will moderate to 10 per cent or near about in the second half. Sridhar Chandrasekhar, head, Crisil Research, says: “With Maruti’s production returning to normal, the revival in car sales growth is likely to be sustained. We expect a seven-nine per cent growth in car sales volumes over the remainder of the fiscal, and thus maintain our forecast for 2011-12 at zero-three per cent."



Despite Maruti’s performance, the sector as a whole continues to show mixed trends. Mahindra & Mahindra’s auto sales jumped 53 per cent in November at 40,722 units, compared to the 26,666 units it sold in November 2010. Bucking industry trends, domestic sales stood at 38,159 units during November, as against 25,166 units during November 2010, an increase of 52 per cent. The four-wheeler commercial segment (which includes the passenger and load categories) clocked 74 per cent growth at 13,362 units.

As has been the case so far, while passenger car sales are showing a slowdown, two-wheelers and commercial vehicles are doing brisk business. Though players like TVS and Hero MotoCorp have not met the expectations of analysts, they have shown healthy growth in sales. Hero MotoCorp, for instance, reported a 27.6 per cent increase in sales at 536,772 units in November. However, analysts say the company was expected to clock 543,000 units a month. Tata Motors, too, reported a very good set of numbers for November.

Still, it has been the only company to show year-on-year contraction in sales this year. Total vehicle sales for it have jumped 40.6 per cent to 76,823 units, compared to the 54,622 units the company sold in the same period last year. Sales of the Nano and Indica, which had dramatically slowed, also picked up in November. In the commercial vehicles segment, too, the company has expectedly done well in the light commercial vehicle segment. It sold 44,737 CVs in the domestic market, against 35,079 units in the same period last year. Of the total CV sales, light commercial vehicle sales comprised 28,673 units, a growth of 40.7 per cent.