Automobile Monthly Sales Update - A Joy Ride - PINC Sector Report

Automobile sales maintained their tempo in the month of September’10 with growth across all the segments. In anticipation of strong festive season demand, manufacturers tried to increase their production capacity through de-bottlenecking leading to record production. Due to floods in north India, companies like Tata Motors lost production while Hero Honda faced problems in moving out finished products to dealers.

2-wheelers segment reported their best ever performance with monthly volumes of 1.13mn units, a growth of 20%. In the passenger vehicles segment, with robust demand in the domestic market, major exporters like Hyundai and Maruti are giving preference to domestic markets leading to subdued exports. In the commercial vehicle segment, medium and heavy commercial vehicles (MHCV) continues to benefit from demand preponement.

3-wheelers segment continues to show strong momentum with over 30% growth. We expect sales to remain strong during the month of October’10 due to festive demand.

Our Viewpoint

We expect the demand to remain robust in the near term due to festival season. Easy availability of financing and attractive schemes by various banks will be another reason behind the demand growth. We continue to maintain our positive outlook on the sector. Our top picks in the sector are Mahindra & Mahindra, Bajaj Auto and Hero Honda.

Source : Equity Bulls

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