July Auto sales were a mixed bag; hopes for better monsoon

For Indian auto players, July month was a mixed bag with passenger vehicle shining, while commercial vehicle disappointed and two-wheelers reported decent volume growth.

In passenger vehicle segment, Maruti Suzuki dominated the market by rebounding from its weak June 2016 sales and showing robust performance in July, 2016 from Baleno, Ciaz and Brezza.

Tata Motors witnessed strong growth in this segment on the back of strong volumes of Tiago.

Overall, the passenger vehicle has improved by 10.80% to 2,24,305 units sold in terms of volume compared to 2,02,426 sold in the same month of the previous year. The performance was strong against previous month by rising over 20.30%.

A good monsoon, pay hikes and festive season could drive strong demand in the coming months, says HDFC Securities.

Commercial Vehicle (CV) segment disappointed during this month.

Eicher Motors was the only company who managed to perform strongly. However, the company also declined along with its peers on month-on-month basis.

The aggregate volumes for key CV players in the medium and heavy commercial vehicle sub-segment (MH&CV) was weak for the second month.

In MH&CV segment, Tata Motors reported decline of 9% year-on-year (yoy), while Ashok Leyland dropped by 7% yoy.

However, light commercial vehicles were positive with Tata Motors and Ashok Leyland growing by 5% and 4% on year-on-year respectively.

Sneha Prashant and Rupin Shah of HDFC securities says, “Demand to pick up with macro pick-up, likely scrappage implementation and prebuying ahead of pan-India BS IV implementation.

All Two-wheeler players reported robust motorcycle and scooter sales growth driven by good monsoon.

Not to forget Royal Enfield which took the top spot in this segment. The Eicher Motor-backed two wheeler rose by 31% yoy to 53,738 units, also up by 36% yoy in Q1FY17.

Hero Moto Corp showed a positive growth after falling for the last 2 months. Bajaj’s domestic 2W sales were strong with V15 and new Platina doing well.

A healthy outlook for monsoons and positive impact of recent launches to drive steady growth, added HDFC securities.

Domestic Tractors have continued to provide double-digit growth as volumes rising during this month, with Escorts jumping by 18% yoy and Mahindra & Mahindra scoring above 15.3% yoy.

While talking on performance, Rajesh Jejurikar, President and Chief Executive of Mahindra & Mahindra also said, With normal rainfall and its improved spread across India in the month of July, Kharif sowing has been more than last year. We hope for an improved agricultural output and tractor demand in the future.”

Also hopes are on GST bill to boost this sector, Suvodeep Rakshit of Kotak Mahindra said that in case the GST Council puts UVs in the ‘standard’ category (instead of ‘high’ rate of 40%), there could be significant benefits to the automobiles sector.