Bajaj declines 18%, Ashok Leyland down 20%

Ashok Leyland sales down 20% in December
Hinduja flagship firm Ashok Leyland Ltd on Wednesday reported a 20% decline in total commercial vehicle sales to 15,493 units in December 2018. The company had posted sales of 19,251 units in the year-ago month, Ashok Leyland said in a regulatory filing.
Medium and heavy commercial vehicle sales were at 11,295 units last month, against 15,948 units in December 2017, down 29%. Light commercial vehicle sales stood at 4,198 units, compared with 3,303 units in December 2017, an increase of 27%, it said.

Bajaj Auto sales up 18% in December
Bajaj Auto Ltd on Wednesday reported 18% increase in total sales in December at 346,199 units as against 2,92,547 units in the same month previous year. Motorcycle sales grew 31% to 298,855 units in December 2018 against 228,762 units in December 2017, the company said in a BSE filing.
Commercial vehicles sales declined by 26% to 47,344 units during the month compared to 63,785 units in the year-ago period. Exports stood at 165,848 units in the month as against 143,038 units in the same month previous year, an increase of 16%.

Honda Cars sales up 4% to 13,139 cars in December
Honda Cars India Ltd reported on Tuesday 4% increase in its domestic sales to 13,139 units in December. The company had sold 12,642 units in India in December 2017, Honda Cars said in a statement. The company also exported 315 cars last month.
“The market continued to remain challenging in December. However, with lucrative year-end offers on many of our models and strong performance of new models Amaze and CR-V, Honda Cars recorded 4% sales growth in December 2018,” said Rajesh Goel, senior vice president and director (sales and marketing) at Honda Cars India.
The company said it has registered a cumulative growth of 3.7% selling 134,797 units during April-December period in 2018, as against 129,964 units in April-December 2017.

Tata Motors sales fall 8% to 50,440 units in December
Tata Motors Ltd reported Tuesday an 8% decline in domestic sales to 50,440 units in December as compared with 54,627 units in the year-ago period. The company’s passenger vehicle sales in the domestic market rose 1% to 14,260 units last month, compared with 14,180 units in December 2017, the company said in a statement.
“In December 2018, we have strived to maintain our growth trajectory during what was a rather sluggish period for the entire auto industry,” said Mayank Pareek, president (passenger vehicles) at Tata Motors.
The company’s commercial vehicle sales in the domestic market stood at 36,180 units in December, down 11% from 40,447 units in the same month last year.
Total exports during the month stood at 3,999 units, against 6,293 units in December 2017—a dip of 36%.

Royal Enfield sales fall 13% in December
Eicher Motors Ltd’s motorcycle unit Royal Enfield on Tuesday reported a 13% y-o-y to 58,278 motorcycles in December, according to its stock exchange filing.
Sales of Royal Enfield’s 350cc motorcycles, including the Classic 350, fell 15% to 53,790 units. Sales of models with engine capacity up to 500cc, including the Himalayan and Classic 500 bikes, rose 21%. Royal Enfield exported 2,252 units in December, up 41% y-o-y. The company is yet to begin sales of its 650cc twins—Continental GT and Interceptor.
The slump in Royal Enfield sales comes even as new entrant Jawa Motorcycles reported that it is sold out till September 2019.

Hyundai car sales up 5% in December
Hyundai Motor India Ltd on Tuesday reported 4.6% increase in domestic sales at 42,093 units in December 2018. The company had sold 40,158 cars in December 2017, the carmaker said in a statement. In 2018, Hyundai sold 710,012 units, its highest ever in a year, as compared with 678,221 units in 2017, it added.
Domestic sales during the year rose 4.3% to 5,50,002 units as compared with 527,320 units in 2017. Exports during the year rose to 1,60,010 units, up 6% from 150,901 units in 2017.
Commenting on the sales figures, Hyundai’s India sales head Vikas Jain said that the company achieved its best-ever annual domestic sales on the back of the demand for the all-new Santro, Grand i10, Elite i20, Verna and Creta.
“Our blueprint for 2019 is to develop innovative mobility solutions and technologies that combine smart, connected and intelligent driving,” said Jain. PTI

Mahindra tractor sales down 6% in December
Mahindra and Mahindra Ltd on Tuesday reported 6% decline in its total tractor sales at 17,404 units in December 2018. The company had sold 18,488 units in the year-ago month, the automaker said in a statement. Domestic tractor sales were at 16,510 units last month as against 16,855 units in December 2017, down 2%, it added.
Exports were also down 4% last month at 894 units from 1,633 units in December 2017, the company said.
Mahindra president (farm equipment sector) Rajesh Jejurikar said: “Even though the rabi crop sowing has been lower than desired, we hope that the government’s initiatives in the agri and rural sectors would enable tractor sales momentum in Q4FY19.”

Two-wheeler sales likely to grow at 8-10% in FY19: Icra
Bike and scooter sales in India is expected to grow at 8-10% in 2018-19 amid concerns over increasing cost of acquisition disturbing positive demand drivers, according to ratings agency Icra Ratings Ltd. Supported by growing per capita income, improved farm sentiment following near-normal monsoon over the last three financial years, higher minimum support price (MSP) and farm loan waiver in select states, the domestic two-wheeler industry volumes are expected to grow at 8-10% during FY19, Icra said in a statement.

The ratings agency further said it has a stable outlook on the Indian two-wheeler industry.

The sector has reported 11.1% year-on-year volume growth in April-October FY19.

This is despite some one-off adverse events during the period—increase in insurance premium across the country, Kerala floods in August 2018 and regulatory changes in West Bengal mandating two-wheeler sale to only valid licence holders in July 2018, it said.

Increase in rural income would support motorcycle demand; and on the other hand, scooters’ demand is expected to be led by rapid urbanisation, increased affordability and greater penetration through targeted product launches, Icra said.

However, on the flip side, it said concerns which could moderately disturb the positive demand drivers are increasing cost of acquisition of a two-wheeler due to rising raw material prices and hike in insurance premiums, rising interest rates and somewhat unevenly distributed monsoon in FY2019.

Although, some pre-buying in the second half of FY20 due to implementation of Bharat Stage VI from April 1, 2020, is likely, it said.

For the medium term, Icra said: “The two-wheeler industry is expected to report a volume CAGR of 7-8% with positive structural factors like favourable demographic profile, growing middle class, participation of women in workforce and rapid urbanisation.” Icra expects increasing penetration of organised finance into tier 2-3 cities as well as rural centres to support domestic demand as the current share of financed vehicles remains moderate.

The ratings agency said the credit profile of two-wheeler makers remains strong, supported by healthy capacity utilisation (77-80%), high profitability and strong balance sheet across most original equipment manufacturers (OEMs).

Eicher Motors’ CV sales up 2.7% in December
Commercial vehicles (CV) maker Eicher Motors Ltd on Tuesday said it sold 6,113 buses and trucks in December 2018 as compared to 5,995 units in the year-ago period. According to Eicher, Volvo Trucks India’s sold 123 vehicles in the month under consideration as against 132 vehicles last year.

Atul Auto sales up 50% in December
Gujarat-based three-wheeler maker Atul Auto Ltd on Tuesday said its sales in December 2018 rose nearly 50% to 4,332 units from 2,890 units in December 2017. Total sales in the April-December period of fiscal year 2018-19 rose 21.36% to 37,767 as against 3.1,120 units in the corresponding period in the previous fiscal.

Isuzu sells 817 vehicles in December
Isuzu Motors India Pvt. Ltd on Tuesday said it sold 817 vehicles In December as against 974 units in the year-ago period.

Muted auto sales fail to deter component makers
Auto component makers have drawn up ambitious capital expenditure plans because of the need to upgrade their technologies in line with upcoming stricter vehicle emission norms and other regulations in the automobile sector. The investments are being planned despite moderating sales volume and pressures on profit margins. Crisil Ltd pegs auto component companies to spend ?24,000 crore on capex over the next two years, 30% more than the preceding two years.

Why are the component makers investing?

From 1 April 2020, the country will embrace BS-VI emission norms, upgrading from the current BS-IV standards. Analysts expect component makers in the entire power train chain will need to upgrade their technologies to comply with the new norms.

Besides, the government’s thrust on electric vehicles implies a paradigm shift in components too. For instance, battery firms, Amara Raja Batteries Ltd and Exide Industries Ltd, are gearing up to shift from lead acid to lithium-ion batteries. Some original equipment manufacturers (OEM) such as Maruti Suzuki India Ltd and Mahindra & Mahindra Ltd are also investing to prepare for the new wave of electric vehicles.

That apart, there seems to be a consensus on the long-term growth prospects of the auto sector. A report by Morgan Stanley titled India’s Transport Evolution says, “India is 3% of global car sales now but will drive half of the incremental global car demand over 2017-30.”

Therefore, optimism among component makers is understandable. In spite of the sales slowdown across various auto segments in the second half of calendar year 2018, component firms are adding capacity in existing areas such as tyres, interiors, forgings and castings to cater to the long-term demand. The trend of component makers forging technology tie-ups or acquiring overseas parts makers is likely to gain traction in the next fiscal year.

This fiscal year could however be a tough year in terms of profit expansion. According to a report by Icra Ltd, component makers’ realizations and content per vehicle is set to improve, translating into a healthy 12-13% revenue growth in FY19. Margin pressure may stem from volatile commodity prices and depreciation of the rupee along with sales moderation, Icra said.

Fortunately, the sector’s fundamentals have been among the best in the country. Most firms, barring some in the tyre segment with huge capex for expansions, have displayed healthy cash flows. Crisil’s data shows an average 15-16% growth in operating profit over the last five years. The robust cash flow accretion thereof will enable manufacturers to meet capex requirements, without any adverse impact on the balance sheet. Meanwhile, technology requirements could also translate into increased imports for a while, until local investments are made to indigenize technology. That said, the need for improved technology along with stringent tax structures such as the GST may result in a consolidation.

To sum up, the year ahead could see a wave of investments in auto components amid challenges of revenue moderation and margin pressure. From investors’ perspective, the rally in component stocks over the last 12-18 months has increased valuations of key firms to about 18-20 times one-year forward earnings. In the near-term, increased capex may pull down earnings growth. This could limit upsides in stocks unless quarterly results surprise positively or there is news flow on strong acquisitions, driving share prices further up.

Escorts agri-machinery sales rise in December
Escorts Ltd on Monday said total sales for agri-machinery segment rose in December 2018, with 4,598 tractors sold during the month as against 3,606 units in the year-ago period.

Mahindra total sales up 1% in December
Mahindra and Mahindra on Monday said it sold 39,755 vehicles in December 2018 as against 39,200 units in December 2017—a 1% rise year-on-year. Of the total sales, passenger vehicles comprised 15091 units, as against 15543 units a year ago, and tractor sales came in at 16510 units compared to 16855 units in year-ago period. Exports during the month, however, rose to 3065 units compared to 2,221 units in December 2017.
Mahindra will launch its new compact SUV, the Mahindra XUV300, in February in a segment dominated by Maruti Suzuki Vitara Brezza. Built on the X-100 platform, which has produced SsangYong Tivoli, XUV300 will be launched in both the petrol and diesel variants. Mahindra’s Korean subsidiary SsangYong has sold over 2.6 lakh Tivoli in over 50 countries since its launch in 2015.

Maruti Suzuki steers away from diesel engine cars
Maruti Suzuki India Ltd plans to shut its diesel engine assembly plant in Gurgaon in the biggest sign yet of a grim future for diesel cars in India. The Suzuki Motor Corp. unit might either convert the diesel engine line in its Gurgaon plant to produce petrol engines or add an assembly line for petrol engines at its plant in Manesar, said three people directly aware of the development. Both the factories are located in Haryana.

Maruti’s move highlights waning demand for diesel vehicles in India and its plans to aggressively tap the market for petrol and CNG cars, as well as ecofriendly hybrid cars and electric cars. India’s largest carmaker is expected to gain the most from a deepening partnership between its parent Suzuki and Toyota Motor Corp., which covers various areas—including the production of hybrid and electric cars.

Sale of diesel cars is expected to fall sharply in India once the more stringent Bharat Stage VI (BS VI) emission norms come into force from 1 April 2020. Upgrading of existing BS IV diesel engines to BS VI would make them much costlier, potentially affecting demand, said the people cited above.

Maruti currently assembles a 1.3-litre diesel engine sourced from Fiat in Gurgaon. The engine powers some of its highest-selling models such as Baleno, Vitara Brezza and Ertiga. The Gurgaon plant also makes an 800cc diesel engine, which has been developed in-house and is currently offered on Maruti’s Super Carry light truck.

The diesel assembly line in Gurgaon has a capacity of approximately 170,000 engines per annum. The automaker also produces Fiat’s 1.3-litre diesel engine at its Manesar factory, which has an annual capacity of around 300,000 units.

Meanwhile, Maruti plans to stop using the 1.3-litre diesel engine for its cars, replacing it with a 1.5-litre diesel engine developed in-house by Suzuki, the people said, requesting anonymity.

“In the long run, Maruti will not offer the 1.3-litre diesel engine any more and in the medium term, the diesel engine assembly line in Manesar will suffice for the demand in the market,” said one of the three people cited earlier.

Maruti, like other carmakers, is witnessing a shift in customer preference for diesel cars, as they are considered more polluting than those that run on petrol. Diesel cars still cost more than petrol models, while the price differential between the two fuels has vastly narrowed in recent years.

Maruti didn’t respond to an email sent on Wednesday.

The share of petrol cars in India has risen from 47% in FY14 to 60% in FY18, according to data from the Society of Indian Automobile Manufacturers (Siam). During the same period, the share of diesel vehicles fell from 53% to 40%.

Suzuki has already started working on a full hybrid car for India and has earmarked a record $1.4 billion for research and development, the lion’s share of which will be deployed for the development of hybrid and electric cars in FY19. The company has also requested the Union government to expand the retail outlets for CNG, with sales of Maruti’s CNG vehicles growing 50% so far this fiscal.

Companies such as Groupe Renault SA and Daimler AG have reduced manufacturing of diesel vehicles in Europe as consumers move towards petrol, hybrid and electric cars. Maruti will become the first automaker in India to effect a significant cut in diesel car production after the BS VI norms are implemented.

“Globally, diesel as a fuel has come under regulatory scanner and urban buyers are informed about this. Hence, they are staying away from diesel vehicles,” said Anil Sharma, associate director at market researcher MarketsandMarkets. “Also, with BS VI emission norms, per unit cost of developing diesel engines will rise significantly, which will be passed on to the consumers. As a result, the automakers are cutting down their diesel engine capacities.”

Last year, Maruti stopped offering the 800cc diesel engine option on its small car models, such as the Celerio, due to lower-than-expected sales.

The first person cited earlier said most carmakers in India were seeking to cut diesel vehicle production on expectations that demand would fall over the next couple of years.

In 2012, the board of Maruti decided to invest in the diesel engine plant in Gurgaon due to surging demand for diesel cars in India. In 2015, Maruti renewed its agreement with Fiat for the 1.3-litre diesel engine.

“Senior executives in Maruti are of the opinion that the diesel engine manufacturing capacity in Manesar will be enough for the company to cater to the demand in the coming years,” the second person said on condition of anonymity. “Also, to convert an existing engine assembly line it takes a year and a half. So the reduction in diesel engines will not be immediate.”

R.C. Bhargava, Maruti’s chairman, said in a press conference on 19 December that the company was witnessing lower sales of diesel cars this fiscal, and would produce diesel cars based on customer requirements and market demand. The company, however, posted a 50% jump in sales of CNG vehicles so far in this fiscal, he said.

Toyota car sales up 10% to 11,830 units in December
Toyota Kirloskar Motor India Pvt. Ltd has reported a 10% increase in car sales in December to 11,830 units, compared with 10,793 units in the same month last year. For 2018, Toyota’s annual domestic sales rose 9% to 1,51,474 units, against 1,39,566 units last year, the company said.
“We’re happy to close the year with a series of positive milestones despite the dampening effect on consumer sentiment owing to hike in fuel prices, higher interest rates, and increase in insurance premium,” said Toyota India’s deputy MD N. Raja. The buying sentiment had seen a slowdown in the past few months owing to adverse effects of macroeconomic factors, yet the industry hit back with a steady growth in car sales, he added.
In December, Toyota and Suzuki deepened their alliance—a move that benefits Maruti Suzuki in a big way, Mint reported on 26 December. Toyota wants to learn from Maruti Suzuki the art of selling small cars. Maruti in turn wants to build a portfolio of bigger, premium cars. The companies will go for cross badging of their Corolla, Baleno and Vitara Brezza cars.

Maruti Suzuki reports 1.3% decline in December car sales
India’s largest car maker Maruti Suzuki India Ltd today reported 1.3% decline in sales at 1,28,338 units in December 2018. The company had sold 1,30,066 units in December 2017, Maruti Suzuki said in a statement. Domestic sales were up 1.8% at 1,21,479 units in December as against 1,19,286 units in the year-ago month.
Sales of small cars, such as the Alto and Wagon R, were at 27,661 units as compared to 32,146 units in December 2018, down 14%. Sales of compact hathback segment, including models such as the Swift, Celerio, Ignis, Baleno and Dzire, were down 3.8% at 51,334 units as against 53,336 units in December 2017, the company said.
The carmaker’s sedan the Suzuki Ciaz sold 4,734 units as compared to 2,382 units in the same month a year ago. Sales of utility vehicles, including Vitara Brezza, S-Cross and Ertiga were up 4.9% at 20,225 units as compared to 19,276 units in the year-ago month, Maruti said.
Exports in December were down 36.4% at 6,859 units as against 10,780 units in the corresponding month last year, it said.

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