>SPEEDOMETER (ICICI SECURITIES)

Two-wheelers move ahead

‘Speedometer’, a monthly product on the automobile sector, comprises relevant themes, industry statistics and analysis of trends. The auto sector saw mixed growth in May ’09, with both two-wheeler and passenger vehicle (PV) segments in the positive owing to reduction in interest rates and improvement in sentiment post general elections. Two-wheelers led the trend, registering 11.5% YoY growth – domestic volumes rose 12.4% YoY and exports grew 3.7% YoY. PVs followed with 4.5% YoY volume growth – domestic volumes were marginally down 0.8% YoY and exports were up 39.2% YoY. Threewheeler volumes declined 4.3% YoY on account of sharp 29.5% dip in exports, even as domestic volumes registered 5.3% YoY growth. The commercial vehicle (CV) segment remained in the negative – M/HCVs dipped 35.4% YoY; LCV volumes declined 1.9% YoY. Hero Honda Motors (HHML) and Mahindra & Mahindra (M&M) remain our top picks in the sector.

■ PVs – Exports led. PV volumes in May ’09 improved 4.5% YoY to 170,586 units on the back of 39.2% YoY growth in exports to 29,763 units, even as domestic volumes marginally declined 0.8% YoY to 140,823 units. PV volume growth was led by 20.6% YoY rise in volumes of compact (B) category, albeit 12.6% YoY decline in the mid-size (C) category. Among various sub-segments, while volumes of passenger cars and MPVs rose 8.7% YoY and 33.4% YoY respectively; UV volumes dipped 29.9% YoY. In May ’09, Maruti Suzuki India’s (MSIL) overall market share improved 510bps YoY to 50.3%, followed by drop in market share of 60bps YoY to 16.7% in
of Hyundai Motor India (HMI) and 180bps YoY to 13.4% for Tata Motors (TAMO).

■ Two-wheelers – Revving up. Two-wheeler volumes rose 11.5% YoY in May ’09 – while domestic volumes rose 12.4% YoY to 727,937 units, exports grew 3.7% YoY to 80,138 units. In the domestic market, volumes of scooters grew 11.2% YoY (excluding electric-scooter volumes of 688 units, down 52.9% YoY), motorcycles rose 12.3% YoY to 576,541 units and mopeds increased 20.3% YoY. In motorcycles, HHML’s market share rose 440bps YoY to 62.3.%, while that of Bajaj Auto (BAL) and TVS Motor (TVSM) stood at 19.7% (down 560bps YoY) and 7.5% (down 70bps YoY) respectively.

■ CVs – Decline continues. CV volumes dipped 18.9% YoY to 33,072 units in May ’09 on account of sharp 35.4% YoY drop in M/HCVs to 13,392 and LCVs registering marginal decline of 1.9% YoY to 19,680 units. TAMO maintained leadership in CVs (M/HCVs: up 880bps YoY to 70.8%; LCVs: up 90bps to 58.3%), followed by Ashok Leyland (ALL) in M/HCVs (down 12.8 percentage points -pps YoY to 13.5%) and M&M in LCVs (up 50bps YoY to 29.1%).

To see full report: SPEEDOMETER