June 2018 was yet another month of strong double-digit growth for the automobile industry. All segments – passenger vehicles (PV), commercial vehicles (CV) and two wheelers (2W) – reported impressive double-digit growth of 43%, 40% and 24% y-o-y, respectively. The PV segment’s sales surged by 43% for the month as against an average 12% growth for January to May
2018. Low base of June 2017 due to transition impact of GST had impacted dispatches. This coupled with a slew of new launches/refreshers launched in the recent past added to the sales momentum for the month.
2018. Low base of June 2017 due to transition impact of GST had impacted dispatches. This coupled with a slew of new launches/refreshers launched in the recent past added to the sales momentum for the month.
The CV segment reported robust 40% growth
in June 2018 because of a slightly low base in June 2017. Moreover, uptick in the economy due to rise in industrial activity and heightened infrastructure spends aided CV growth. Both the MHCV and LCV segments reported strong 38% and 41% growth, respectively. The MHCV segment’s growth can be attributed to buoyant demand from the infrastructure industry, road construction, building of irrigation facilities and affordable housing projects across
the country. While the LCV segment’s growth can be attributed to healthy rural demand, evolving hub n spoke model, translating into need for last-mile connectivity and improved demand from the e-commerce sector. In addition, new product launches/upgrades by select players added to the growth momentum. Positive rural sentiments on account of improving farm incomes and a good spread of monsoon across the country led to robust 24% growth in 2W sales for the month.
in June 2018 because of a slightly low base in June 2017. Moreover, uptick in the economy due to rise in industrial activity and heightened infrastructure spends aided CV growth. Both the MHCV and LCV segments reported strong 38% and 41% growth, respectively. The MHCV segment’s growth can be attributed to buoyant demand from the infrastructure industry, road construction, building of irrigation facilities and affordable housing projects across
the country. While the LCV segment’s growth can be attributed to healthy rural demand, evolving hub n spoke model, translating into need for last-mile connectivity and improved demand from the e-commerce sector. In addition, new product launches/upgrades by select players added to the growth momentum. Positive rural sentiments on account of improving farm incomes and a good spread of monsoon across the country led to robust 24% growth in 2W sales for the month.
In addition, select players had the benefit of low base in June 2017 (due to GST impact), which further added to the 2W segment’s growth. Tractor volumes also grew by 30% for June 2018.Key takeaways from June 2018 performance In the 2W segment, Bajaj Auto outperformed the industry, reporting 65% y-o-y growth for the month, led by revival in both domestic (due to low base in June 2017) as well as exports markets (driven by strengthening crude oil prices). Honda Sector UpdateStreak of double-digit growth continues...Motorcycles and Scooters India also outperformed the industry, reporting 28.5% growth, backed by strong growth of the scooters segment.
Hero MotoCorp and TVS Motors reported double-digit growth of 13% and 12% y-o-y, respectively, butunderperformed the industry. ŠIn the CV segment, Tata Motors and Eicher Motors outperformed, reporting 50% and 63% y-o-y volume growth, respectively. Tata Motors
continued to regain market share, led by new launches. Eicher benefited from a low base
in June 2017. Both Ashok Leyland and M&M underperformed, reporting 28% and 27% y-o-y growth, respectively, indicating market share loss to competition.ŠIn the PV segment, Tata Motors and Maruti Suzuki outpaced the industry, reporting 63% and 45.5% y-o-y volume growth, respectively. Volumes of Tata Motors surged due to strong demand for Tiago, Tigor, Hexa and Nexon coupled with low base in June 2017.
continued to regain market share, led by new launches. Eicher benefited from a low base
in June 2017. Both Ashok Leyland and M&M underperformed, reporting 28% and 27% y-o-y growth, respectively, indicating market share loss to competition.ŠIn the PV segment, Tata Motors and Maruti Suzuki outpaced the industry, reporting 63% and 45.5% y-o-y volume growth, respectively. Volumes of Tata Motors surged due to strong demand for Tiago, Tigor, Hexa and Nexon coupled with low base in June 2017.
Maruti Suzuki also outpaced, driven by healthy order backlog. Hyundai Motors India and M&M underperformed, reporting growth of 21% and 12%, respectively, compared to industry growth of about 43%.
In the tractor segment, Escorts outperformed, reporting whopping 73% growth on account of positive rural sentiments and low base in June 2017 due to transition impact of GST. M&M underperformed the industry, reporting 23% y-o-y growth. Healthy spread of monsoon across the country resulted in double-digit growth for M&M. Preferred picks: We continue to prefer Maruti Suzuki in the automotive space, given the sustained demand for its products, leading to a consistent rise in its market share in the PV segment. Ashok Leyland would also be our preferred pick, given it is a pure CV play and the best stock to play the MHCV upcycle.We also like TVS Motors (given the strong new product launch pipeline and foray in to the premium
motorcycle segment) and M&M (strong traction in rural demand and new launches in the automotive
space).
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