Automobile Industry Monthly Update

6th June, 2011

Auto sales continued its downtrend forcing SIAM to lower its sales forecast for FY12 from its earlier projection of 16-18% growth to 14-16%. Despite huge discounts, most carmakers barely managed single digit growth in May 2011 compared to the resounding 29.1% growth of last year. Rising commodity prices, fuel price escalation and high interest rates forced consumers to stay away. However the two wheeler sales continued its upward trend with most of manufacturers registering a modest double digit growth in May 2011. In continuation of the trend observed in the previous month of April 2011, most of the automakers registered a sequential decline across all segments. Market leader Maruti Suzuki India Ltd continued its dismal performance, posting a meager 1.9% yoy growth in total sales which was driven by a bare 3.9% yoy growth in the domestic sales. The best performer for the month, auto major Mahindra & Mahindra continued its growth momentum and grew handsomely at 16.3% yoy with the automotive segment registering a 20.5% yoy growth. The M&M tractor segment grew by 9.5% yoy. In the two wheeler space, Bajaj Auto outperformed peers by registering a 19.4% yoy growth. Hero Honda and TVS Motors too registered modest double digit growth of 14.8% and 18.4% respectively driven majorly by growth across all segments.

Outlook Positive Negative headwinds in terms of interest rate hike, fuel cost and rising commodity costs continued to play spoil sport forcing the auto makers to register weak growth in the month of May. With inflationary pressures likely to persist for another 6 months, we expect the auto makers to register weak numbers for FY12. The growth in volumes would be driven mostly by new product launches and rising rural demand. Though, good monsoon could boost rural demand and act positively for commercial vehicle manufactures like Mahindra & Mahindra and Tata Motors.

Total motor vehicles and car sales (Quarterly)

1200000

1000000

800000

600000

400000

200000

0 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Total Car Sales Mar-10 Mar-11

Total Motor Vehicles Sales

Total motor vehicles and car sales growth (YOY)

60%

50%

40%

30%

20%

10%

0%

-10%

-20% Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11

Total motor vehicles sales growth YOY

Total car sales growth YOY

Total two wheeler & motorcycle sales (Quarterly)

4000000

3500000

3000000

2500000

2000000

1500000

1000000

500000

0 Mar-05 Mar-06 Mar-07 Total Two Wheeler Sales Mar-08 Mar-09 Mar-10 Mar-11

Total Motor Cycles Sales

Total two wheeler & motorcycles sales growth (YOY)

50%

40%

30%

20%

10%

0%

-10%

-20% Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11

Total motorcycles sales growth YOY

Total two wheeler sales growth YOY

Maruti Suzuki India Ltd Maruti Suzuki disappointed the street by posting a meager 1.9% yoy growth and sold 1,04,073 cars in May 2011 as compared to 1,02,175 in May 2010. The month of May is generally considered as a good month for passenger car sales on account of wedding season and pre monsoon sales. The carmaker sold 92,419 cars in the domestic market with unsatisfactory performance across most of the segments especially A2. The A2 segment registered a 2.6% decline and sold 61,048 units in May 2011. The company sold 2,262 units of Maruti 800 in the month of May 2011.The A3 segment (SX4 and Dzire) registered a double digit growth and sold 13,514 units as against 10,883 units in May 2010. The C segment consisting of Omni, Versa and Eeco grew by a good 20% (on a lower base) to 15,545 units. The company sold 50 units of the newly launched Kizashi. Exports remained muted for the company and declined by 13.0% yoy basis. Maruti Suzuki is mulling to set up its fourth plant in Gujarat with a capacity of 10 lakh units expandable up to 20 lakh units. Going forward, we expect the volumes to improve and the waiting period of Maruti vehicles to reduce to 2-3 weeks on back of capacity expansion.
Maruti Suzuki India Ltd A1 - M800 Kizashi C - Omni, Versa, Eeco
A2 - Alto, Wagon R, Estilio, Swift, A-Star, Ritz

May-11 2,262 50 15,545 61,048 13,514 92,419 1,100 93,519 10,554 1,04,073

May-10 2,558 12,953 62,679 10,883 89,073 968 90,041 12,134 1,02,175

YOY % -11.6 20.0 -2.6 24.2 3.8 13.6 3.9 -13.0 1.9

Apr-11 2,528 35 13,022 57,443 13,899 86,927 217 87,144 10,011 97,155

MOM % -10.5 42.9 19.4 6.3 -2.8 6.3 406.9 7.3 5.4 7.1

YTD FY12 4,790 85 28,567 1,18,491 27,413 1,79,346 1,317 1,80,663 20,565 2,01,228

YTD FY11 4,816 23,607 1,19,095 20,877 1,68,395 1,680 1,70,075 25,158 1,95,233

YOY % -0.5 0.0 21.0 -0.5 31.3 6.5 -21.6 6.2 -18.3 3.1

A3 - SX4, Desire Total Passenger Cars MUV - Gypsy, Grand Vitara Domestic sales Exports sales Total sales

Total Vehicle Sales and its growth in % YOY

140000 120000 100000 80000 60000 40000 20000 0 Dec-08 Apr-09 Aug-09 Dec-09 Total vehicle sales Apr-10 Aug-10 Dec-10 Vehicle sales growth YOY Apr-11 80% 60% 40% 20% 0% -20%

Domestic A2 Sales and its growth in % YOY

100000 80000 60000 40000 20000 0 Dec-08 Apr-09 Aug-09 Dec-09 Domestic A2 sales Apr-10 Aug-10 A2 sales growth YOY Dec-10 Apr-11 80% 60% 40% 20% 0% -20%

Other vehicles sales and its growth in % YOY

50000 40000 30000 20000 10000 0 Dec-08 Apr-09 Aug-09 Dec-09 Other vehicles sales Apr-10 Aug-10 Dec-10 Other sales growth YOY Apr-11 100% 80% 60% 40% 20% 0% -20%

Mahindra & Mahindra Ltd With the industry registering a single digit growth in May, Mahindra & Mahindra outperformed the industry by registering a robust double digit growth of 16.3%. The automobile sector surprised positively by posting a robust 20.5% growth in the total sales. However, the meager growth of 9.5% in the tractor segment was disappointing. The company sold 17,952 tractor units in the domestic market, a growth of 8.1% from 16,608 units sold in the previous corresponding month. Tractor exports witnessed 45.1% growth to 940 units from 648 units sold in May 10. With good monsoon season expected this year, pick up in the domestic tractor sales would be witnessed in the coming months. The strong growth in the Automobile segment was on the back of a 33.9% growth witnessed in the UV segment. The sales of the Verito segment grew by a strong 186.9% to 1,291 units. However, sales of LCVs declined by 0.6% and sold 1,001 units. Mahindra plans to launch the SUVs from the Ssangyong stable in the second half of FY12. The company also plans to launch an Electric car NXR by the end of FY12. New product launches and strong rural demand would drive future volume growth for M&M.
Mahindra & Mahindra Ltd UV's Verito - MRPL LCV's - Inclusive of MNAL Total 4 wheelers 3 wheelers Domestic Sales Exports - M&M Exports - Logan - MRPL Export Sales Total Sales (A) Tractors Domestic Exports Total Sales (B) Grand Total sales (A+B) 17,952 940 18,892 53,215 16,608 648 17,256 45,744 8.1 45.1 9.5 16.3 17,740 790 18,530 53,215 1.2 19.0 2.0 0.0 35,692 1,730 37,422 1,03,835 32,305 1,253 33,558 88,089 10.5 38.1 11.5 17.9 May-11 25,369 1,291 1,001 27,661 4,498 32,159 2,164 2,164 34,323 May-10 18,940 450 1,007 20,397 6,641 27,038 1,068 382 1,450 8,488 YOY % 33.9 186.9 -0.6 35.6 -32.3 18.9 102.6 -100.0 49.2 20.5 Apr-11 23,991 1,006 941 25,938 4,411 30,349 1,741 1,741 32,090 MOM % 5.7 28.3 6.4 6.6 2.0 6.0 24.3 24.3 7.0 YTD FY12 49,360 2,297 1,942 53,599 8,909 62,508 3,905 3,905 66,413 YTD FY11 36,938 753 1,867 39,558 12,517 52,075 1,924 532 2,456 54,531 YOY % 33.6 205.0 4.0 35.5 -28.8 20.0 103.0 -100.0 59.0 21.8

Total Sales excluding 2 wheelers & tractors and its growth in % YOY
40000 35000 30000 25000 20000 15000 10000 5000 0 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 -100% 0% -50% 100% 50% 150%

Total sales excluding 2 wheelers and tractors

Total tractor sales and its growth in % in YOY

30000 25000 20000 15000 10000 5000 0 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Tractor Growth in YOY Apr-11 80% 60% 40% 20% 0% -20% -40%

Tractor Sales by Mahindra & Mahindra Ltd.

Tata Motors Ltd In May 2011, Tata Motors total sales were 62,296 vehicles, a growth of 9.7% over 56,777 vehicles sold in May 2010 on the back of a better performance for the LCV segment. Despite intense competition seen in the segment after the entry of Mahindra, the domestic M & HCV and LCV segment registered a robust 12.1% & 23.9% yoy growth. On the export front, LCV segment registered robust growth and was up 63.5% yoy. With new launches in the passenger carrier segment and micro truck segment, we expect the company to maintain its market share in the segment. In the passenger car segment, the sales declined by 12.6% majorly on the account of lower Indica and Indigo sales. Indica sales were lower by 35% yoy and up by 29% mom at 5,497 units. Indigo reported the worst numbers with sales contracting by 19% mom & 35% yoy. Small Car Nano continued its growth momentum and the company sold 6,515 units of Nano in May 2011 as against 3,550 units sold in May 2010. The company has sold 10,012 units in the last month. The domestic sales grew by a robust 7.5% in May 2011 to 56, 762 units from 52,801 units recorded in May 2010. The total export sales grew 39.2% to 5,534 units from 3,976 units sold in the previous corresponding month.
Tata Motors (Standalone) M&HCV LCV UV Cars Domestic Sales (A) M&HCV LCV UV Cars Export Sales (B) Total Sales (A+B) May-11 15,532 21,829 3,121 16,280 56,762 1,396 3,802 55 281 5,534 62,296 May-10 13,860 17,615 2,708 18,618 52,801 1,062 2,326 81 507 3,976 56,777 YOY % 12.1 23.9 15.3 -12.6 7.5 31.5 63.5 -32.1 -44.6 39.2 9.7 Apr-11 13,935 22,803 3,843 19,544 60,125 687 2,503 27 1,041 4,258 64,383 MOM % 11.5 -4.3 -18.8 -16.7 -5.6 103.2 51.9 103.7 -73.0 30.0 -3.2 YTD FY12 29,467 44,632 6,964 35,824 1,16,887 2,083 6,305 82 1,322 9,792 1,26,679 YTD FY11 27,017 35,421 6,048 38,380 1,06,866 1,881 4,193 108 931 7,113 1,13,979 YOY % 9.1 26.0 15.1 -6.7 9.4 10.7 50.4 -24.1 42.0 37.7 11.1

Total Vehicles sales and its growth in % YOY

100000 80000 60000 40000 20000 0 Dec-08 Apr-09 Aug-09 Dec-09 Total vehicle sales Apr-10 Aug-10 Dec-10 Vehicle sales growth YOY Apr-11

150% 100% 50% 0% -50% -100%

UV + Car sales and its growth in % YOY

40000 30000 20000 10000 0 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 UV+Cars UV+Cars sales growth YOY H, M & LCV sales and its growth in % YOY Dec-10 Apr-11

80% 60% 40% 20% 0% -20% -40%

60000 50000 40000 30000 20000 10000 0 Dec-08 Apr-09 Aug-09 Dec-09 H,M&LCV Apr-10 Aug-10 H,M&LCV sales growth YOY Dec-10 Apr-11

200% 150% 100% 50% 0% -50% -100%

Ashok Leyland Ltd Decline in the sales of goods carrier segment led to 12% decline in the commercial vehicle sales of Ashok Leyland which sold 5,725 units in May 2011 as against 6502 units in May 2010. In the passenger segment, domestic sales increased by 17.6% to 1,427 units compared to 1,213 units sold in May 10 while export increased by 33.2% to 297 units from 223 units in May 10. In the goods segment, the domestic sales registered double digit decline of 22.7% while the export sales grew by 19.6%. Despite new product launches, increasing cost of ownerships seems to have weighed high on Ashok Leylands domestic LCV sales which declined 53.0% to 39 units from 83 units sold in the previous corresponding month. LCV exports too declined by 60% to 10 units as against 25 units sold in May 10. Ashok Leyland has lined up Rs 1,200 crore capex for FY12 for capacity expansion. The company is also gearing up for two big launches this year - its light commercial vehicle code named Dost from its joint venture with Nissan and the expansion of its U-truck range.
Ashok Leyland MDV Passenger MDV Goods LCV Domestic Sales (A) MDV Passenger MDV Goods LCV Export Sales (B) Total Sales (A+B) May-11 1,427 3,616 39 5,082 297 336 10 643 5,725 May-10 1,213 4,677 83 5,973 223 281 25 529 6,502 YOY % 17.6 -22.7 -53.0 -14.9 33.2 19.6 -60.0 21.6 -12.0 Apr-11 1,105 3,701 26 4,832 255 404 52 711 5,543 MOM % 29.1 -2.3 50.0 5.2 16.5 -16.8 -80.8 -9.6 3.3 YTD FY12 2,532 7,317 65 9,914 552 740 62 1,354 11,268 YTD FY11 2,389 9,451 123 11,963 495 508 36 1,039 13,002 YOY % 6.0 -22.6 -47.2 -17.1 11.5 45.7 72.2 30.3 -13.3

Total vehicles sales and its growth in % YOY

14000 12000 10000 8000 6000 4000 2000 0 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Total vehicle sales Vehicle sales growth YOY Passenger vehicle sales and its growth in % YOY Dec-10 Apr-11

300% 200% 100% 0% -100%

3000 2500 2000 1500 1000 500 0 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Passenger vehicle sales Passenger sales growth YOY Goods vehicle sales and its growth in % YOY Apr-11

150% 100% 50% 0% -50% -100%

10000 8000 6000 4000 2000 0 Dec-08 Apr-09 Aug-09 Dec-09 Goods vehicle sales Apr-10 Aug-10 Goods sales growth YOY Dec-10 Apr-11

500% 400% 300% 200% 100% 0% -100% -200%

Hero Honda Motors Ltd Hero Honda registered a robust 14.8% yoy growth and recorded monthly sales of 5,00,234 units in May 2011 as against 4,35,933 units in May 2010. Advertising spends during the cricket season also helped bolster sales. Its scooter model Pleasure is clocking average monthly run-rate of 35,000 per month and targets monthly run rate of 50,000 units on the back of new product launches. Post separation from Honda, the company is in the process of re-initiating a rebranding exercise. Hero Honda has completed its de bottlenecking exercise at its existing plants and its current capacity stands at 6 million units. The company is close to finalizing location of its fourth plant which when completed is expected to take the capacity to 9 million units.
Hero Honda May-11 5,00,234 May-10 4,35,933 YOY % 14.8 Apr-11 517,099 MOM % -3.3 YTD FY12 1,017,333 YTD FY11 8,07,585 YOY % 26.0

Total Sales - Motorcycles

Sales and its growth rates in % YOY

600000 500000 400000 300000 200000 100000 0 Dec-08 Apr-09 Aug-09 Dec-09 Sales in Units Apr-10 Aug-10 Dec-10 Apr-11 80% 70% 60% 50% 40% 30% 20% 10% 0% -10% -20%

Growth Rates YOY

Bajaj Auto Ltd Bajaj Auto, the countrys second-largest motorcycle manufacturer, reported a 19.8% rise in total sales. However, the sales declined by 2.3% on mom basis. In the two wheeler segment, the company sold 3,17,989 units registering a volume growth of 18.0% with Discover accounting for 1,39,000 units. The company plans to re launch Boxer in the rural market and also plans to come up with a new variant of Pulsar during the festive season. The three-wheeler sales volume rose by 36.4% yoy to 40,860 units. The exports registered robust growth of 32.2% yoy to 1,26,818 units. Increase in dealerships and new product launches would aid the company in enhancing its rural sales.
Bajaj Auto Motorcycles Scooters Total 2 wheelers 3 wheeler Total sales Domestic Exports May-11 3,17,989 3,17,989 40,860 3,58,849 2,32,031 1,26,818 May-10 2,69,488 2,69,488 29,954 2,99,442 2,03,478 95,964 18.0 36.4 19.8 14.0 32.2 YOY % 18.0 Apr-11 3,22,235 3,22,235 45,074 3,67,309 2,08,887 1,58,422 -1.3 -9.3 -2.3 11.1 -19.9 MOM % -1.3 YTD FY12 6,40,224 6,40,224 85,934 7,26,158 4,40,918 2,85,240 YTD FY11 5,45,583 27 5,45,610 67,304 6,12,914 4,03,039 2,09,875 YOY % 17.3 -100.0 17.3 27.7 18.5 9.4 35.9

Two wheelers sales and its growth in % YOY

350000 300000 250000 200000 150000 100000 50000 0 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 120% 100% 80% 60% 40% 20% 0% -20% -40% -60%

Two wheelers sales in units

Growth Rates YOY

TVS Motor Company Ltd Driven by strong volume growth across all segments, TVS Motor Company logged 18.4% growth in total sales at 1,85,930 units, compared to 1,56,980 units in the previous corresponding year. Domestic two wheeler sales of the company increased by 16.3% yoy with sales of 1,58,829 units in May 2011 against 1,36,621 units reported in May 2010. The scooter segment continued its strong momentum & reported a good 19.7% yoy growth and outperformed motorcycles sales which instead grew by 11.4%. The company sold 68,104 units of mopeds which grew by 24.1% yoy. The three wheeler segment gained traction and grew by 74.6% to Rs 4,039 units in May 2011. Exports grew by a robust 27.8% yoy growth to 23,062 units.

TVS Motors Motorcycles Scooters Mopeds - Scotteretes (bf) Total 2 Wheelers 3 Wheelers Total sales 2 wheelers - Domestic 2 wheelers - Exports

May-11 75,619 38,168 68,104 1,81,891 4,039 1,85,930 1,58,829 23,062

May-10 67,906 31,884 54,877 1,54,667 2,313 1,56,980 1,36,621 18,046

YOY % 11.4 19.7 24.1 17.6 74.6 18.4 16.3 27.8

Apr-11 69,573 35,074 59,536 1,64,183 3,561 1,67,744 1,41,619 22,564

MOM % 8.7 8.8 14.4 10.8 13.4 10.8 12.2 2.2

YTD FY12 1,45,192 73,242 1,27,640 3,46,074 7,600 3,53,674 3,00,448 45,626

YTD FY11 1,33,906 58,744 1,06,706 2,99,356 4,796 3,04,152 2,62,092 37,264

YOY % 8.4 24.7 19.6 15.6 58.5 16.3 14.6 22.4

Two wheelers sales and its growth in % YOY

250000 200000 150000 100000 50000 0 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 50% 40% 30% 20% 10% 0% -10% -20%

Two wheeler sales in units

Growth Rates YOY

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