Monthly Sales Update Institutional Equities Automobile Sales-May 2018 4 June 2018 Growth Momentum Continues Automobile sales in May 2018 were strong across segments, except in case of a few companies. Most companies reported strong double-digit volume growth led by good demand. Commercial vehicle (CV) sales momentum continued as a low base and improved demand helped companies to post strong double-digit volume growth. In the passenger vehicle segment also, car sales were robust with market leader Maruti Suzuki India (MSIL) and other players like Tata Motors reporting strong double-digit volume growth. In the two-wheeler space, Hero MotoCorp reported double digit growth while Honda Motorcycles and Scooters India (HMSI)/TVS Motor Company reported single digit YoY growth. Most other players posted strong double-digit sales volume growth. May is usually a strong month for automobile retail sales in the two-wheeler segment because of the marriage season-led demand and hence most players had posted strong numbers in April 2018 to build inventory ahead of the marriage season. Going forward, with the onset of monsoon in southern and western regions of India and an extreme heat wave in the northern region, we are entering a seasonally lean season for automobile sales with manufacturers also adjusting their inventory level. In the two-wheeler space, market leader Hero MotoCorp reported 11% YoY growth while HMSI recorded 3% YoY growth in sales. Other players like Suzuki, Bajaj Auto and Eicher Motors posted strong 37%/30%/23% YoY growth, respectively while TVS Motor Company reported 9.9% YoY growth in sales. Overall sales of TVS Motor Company and Bajaj Auto were also helped by higher three-wheeler sales and export sales. Exports of Bajaj Auto and TVS Motor Company grew 31%/53% YoY, respectively. In the passenger vehicle segment, market leader MSIL surprised with stronger-than-expected numbers, posting a 26% YoY growth in volume. Tata Motors also reported strong volume growth of 61% in the domestic passenger vehicle space as its recently launched models witnessed robust demand. Mahindra & Mahindra (M&M) reported a muted 2% YoY growth in its passenger vehicle segment sales with the passenger car segment growing 34% YoY, while its commercial vehicles and pick-up van sales grew in double digits. Other car manufacturers like Hyundai India reported 11% YoY growth while Toyota Kirloskar/Ford India/Honda India recorded 13%/11%41% YoY growth, respectively. In the commercial vehicle segment, favourable low base and improved demand led to strong double-digit YoY growth for CV players. Market leader Tata Motors reported a strong 56% YoY growth in CV sales, while Ashok Leyland posted a robust 51% YoY growth in CV sales with medium and heavy commercial vehicle (MHCV) sales growing 70% Other CV players like VE Commercial Vehicles and SML Isuzu also reported strong sales growth of 29%/37%, respectively. Strong demand momentum continued in the tractor segment for most players with M&M and Escorts posting 14%/21% YoY growth, whereas VST recorded a 12% YoY drop in volumes. Going forward, as we enter a seasonally lean season for two-wheeler and car sales, we expect the absolute volume to be lower than the volume registered in May 2018. However, following Goods and Services Tax or GST-related inventory management last year and a favourable low base, there may be strong double-digit volume growth for a few manufacturers. Exhibit 1: Automobile sales snapshot Please refer to the disclaimer towards the end of the document. Gaurant Dadwal Research Analyst gaurant.dadwal@nirmalbang.com +91-22-6273 8145 Vivek Sarin Research Associate vivek.sarin@nirmalbang.com +91-22-6273 8176 Company (units) May-2018 May-2017 YoY (%) Bajaj Auto 4,07,044 3,13,756 29.7 TVS Motor Company 3,09,865 2,82,007 9.9 Royal Enfield 74,697 60,696 23.1 HMSI 5,51,601 5,37,035 2.7 Suzuki Motorcycles India* 53,167 38,923 36.6 Maruti Suzuki India 1,72,512 1,36,962 26.0 Hyundai Motors 56,016 50,265 11.4 Ford India 26,188 23,503 11.4 Honda Cars India* 15,864 11,278 40.7 Toyota Kirloskar India 13,940 12,339 13.0 M&M - Automobiles 46,849 42,003 11.5 M&M - Tractors 29,330 25,749 13.9 Tata Motors 57,994 38,361 51.2 Ashok Leyland 13,659 9,075 50.5 VE Commercial Vehicles 5,874 4,540 29.4 SML Isuzu 1,442 1,052 37.1 Atul Auto 3,983 3,184 25.1 Escorts 8,325 6,886 20.9 VST-Power Tillers 1,751 1,857 (5.7) VST-Tractors 706 800 (11.8) *Domestic volume; Source: Respective companies
Domestic sales grew up 29% YoY, driven by by strong strong two-wheeler and three-wheeler sales. demand. Domestic motorcycle sales continue growth to rebounds grow in double to 24% digits at 24% Commercial vehicles sales continued to to do do well, well, up 76% up 83% Exports of of three-wheelers were were up up 69% sharply by 85% Sales rose 11% YoY, driven by healthy Overall volume two-wheeler numbers of its sales Splendor were higher and HF than Deluxe estimate, models. up 24% YoY, with motorcycle/scooter sales posting 32%/10% YoY growth, respectively. Three-wheeler sales were up by 115% Exports Overall two-wheeler post double-digit sales growth were up -YoY 10% growth YoY, with of 54% motorcycle/scooter backed by a 46% sales rise posting two-wheeler 7%/12% YoY exports. growth, respectively. Three-wheeler sales were up 78% Exports post double-digit YoY growth of 53% backed by a 49% rise in two-wheeler exports. Overall sales grew 14% YoY, driven by double-digit demand for compact vehicles. Ciaz car sales witness a decline of 27% Utility Overall vehicle sales sales up 26% post YoY, flat 1% driven YoY by growth. double-digit demand for compact vehicles. Export Ciaz car sales sales growth witness rebounds a decline to of 19% 15% Utility vehicle sales continue with doubledigit growth of 13% Export sales grow sharply by 48% Exhibit 2: Bajaj Auto s sales Motorcycles 3,42,595 2,77,115 23.6 6,92,212 5,71,047 21.2 Commercial vehicles 64,449 36,641 75.9 1,30,000 72,509 79.3 Total 4,07,044 3,13,756 29.7 8,22,212 6,43,556 27.8 Domestic 2,24,625 1,74,047 29.1 4,54,089 3,51,934 29.0 Exports 1,82,419 1,39,709 30.6 3,68,123 2,91,622 26.2 Exhibit 3: Hero MotoCorp s sales Motorcycles/scooters 7,06,635 6,33,884 11.5 14,00,657 12,29,590 13.9 Exhibit 4: TVS Motor Company s sales Motorcycles 1,26,711 1,18,014 7.4 2,58,415 2,17,904 18.6 Mopeds 75,545 71,731 5.3 1,48,014 1,31,405 12.6 Scooters 95,879 85,681 11.9 1,85,124 1,67,124 10.8 Two-wheelers 2,98,135 2,75,426 8.2 5,91,553 5,16,433 14.5 Three-wheelers 11,730 6,581 78.2 23,107 11,884 94.4 Total 3,09,865 2,82,007 9.9 6,14,660 5,28,317 16.3 Exhibit 5: Maruti Suzuki India s sales Mini- Alto, Wagon R 37,864 39,089 (3.1) 75,658 77,986 (3.0) Compact-Swift, Ignis, Baleno, Celerio, Dzire 77,263 51,234 50.8 1,61,097 1,14,818 40.3 Mid-size - Ciaz 4,024 4,724 (14.8) 9,140 11,748 (22.2) Passenger cars 1,19,151 95,047 25.4 2,45,895 2,04,552 20.2 UV- S-Cross, Ertiga, Brezza 25,629 22,608 13.4 46,433 43,246 7.4 Vans - Omni, Eeco 16,717 12,593 32.7 32,603 26,531 22.9 Total domestic sales 1,61,497 1,30,248 24.0 3,24,931 2,74,329 18.4 LCV-Carry 1,703 428 297.9 3,247 839 - Total exports 9,312 6,286 48.1 17,320 13,009 33.1 Total sales 1,72,512 1,36,962 26.0 3,45,498 2,88,177 19.9 2 Automobile Sales May 2018
Exhibit 6: M&M Automobile division s sales Utility vehicle volume remains flat Overall passenger vehicle volume registers 2% growth. Car and van sales register healthy doubledigit growth of 34% Three-wheeler sales volume growth moderates to 7% YoY, while MHCV sales post 163% YoY jump on a low base. Overall CV sales post 15% YoY growth, while exports rise 134% Passenger vehicles 20,715 20,392 1.6 42,642 39,783 7.2 Utility vehicles 19,295 19,331 (0.2) 39,666 37,694 5.2 Cars + vans 1,420 1,061 33.8 2,976 2,089 42.5 Commercial vehicles 18,748 16,261 15.3 37,711 31,321 20.4 LCV < 3.5T 16,763 15,111 10.9 34,258 29,471 16.2 LCV >3.5T 833 712 17.0 1,397 1,134 23.2 MHCVs 1,152 438 163.0 2,056 716 187.2 Three-wheelers 4,355 4,057 7.3 8,682 7,495 15.8 Domestic sales 43,818 40,710 7.6 89,035 78,599 13.3 Total exports 3,031 1,293 134.4 5,911 2,821 109.5 Total sales 46,849 42,003 11.5 94,946 81,420 16.6 Tractor sales post double-digit YoY growth. The announcement of record production estimates for food grains and horticulture crops will drive the positive sentiment and boost tractor demand. Exhibit 7: M&M Tractor division s sales Domestic 28,199 24,710 14.1 58,083 49,918 16.4 Exports 1,131 1,039 8.9 2,172 1,982 9.6 Total tractor sales 29,330 25,749 13.9 60,255 51,900 16.1 Domestic CV volume up 56% YoY on the back of various macro-economic factors like investment in improved industrial activity, infrastructure development and demand from consumption-led sectors. Domestic passenger vehicle sales up 61% YoYon the back of continued strong demand for Tiago, Tigor, Nexon and Hexa models. Exhibit 8: Tata Motors sales PV-Domestic 17,489 10,855 61.1 34,724 23,682 46.6 CV-Domestic 36,806 23,606 55.9 73,082 39,623 84.4 Exports 3,699 3,900 (5.2) 6,709 6,028 11.3 Total 57,994 38,361 51.2 1,14,515 69,333 65.2 MHCV sales post double-digit growth of 70% LCV sales volume continues to grow, registering 10% YoY growth. Exhibit 9: Ashok Leyland s sales MHCVs 10,421 6,143 69.6 19,389 10,675 81.6 LCVs 3,238 2,932 10.4 6,947 5,490 26.5 Total 13,659 9,075 50.5 26,336 16,165 62.9 Power tiller sales and tiller sales post YoY contraction in sales volume. Exhibit 10: VST Tillers sales Power tillers 1,751 1,857 (5.7) 2,419 3,020 (19.9) Tractors 706 800 (11.8) 1,056 1,601 (34.0) Total 2,457 2,657 (7.5) 3,475 4,621 (24.8) 3 Automobile Sales May 2018
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