 "Street starts pruning FY14 auto volume estimates on poor July numbers")
Auto sales have remained lacklustre in July. Volumes of most original equipment makers (OEMs) continued to report a decline both year-on-year as well as month-on-month. Passenger car volumes dipped 6% in July while medium and heavy commercial vehicles volumes have dipped by 17% in July 2013. Even those segments that were doing well so far are now coming under pressure. In July utility vehicle sales were down by 10%.
Companies have failed to deliver upon even the modest expectations of the Street, as the sentiment has considerably weakened. The only company that reported a growth of 1.3% YoY was Maruti but month-on-month even the company’s sales declined by 1.4%.
Analysts say that some of the auto companies have reported their worst performance in 54 months in July this year, even after estimates have been lowered. Maruti had seen volumes fall by nearly 39% in June on inventory clearing, however, despite this in June the sales have declined month-on-month.
Any hope of a turnaround or pick-up in sales now looks dim as the Reserve Bank of India’s actions are clearly no longer supportive of growth or consumer sentiment. From looking at growth, the industry may now look at ways to tide over the slowdown by cutting capacities.
Nomura says that Bajaj Auto’s YoY sales declined 21% in July while it was expecting sales to dip by 13%. Players like Ford in the vehicle segment and Honda Motorcycles & Scooters have reported a growth both month-on-month and year-on-year.
Overall volumes for the automobile industry are expected to decline at a faster pace than expected, believe analysts.
Companies have failed to deliver upon even the modest expectations of the Street, as the sentiment has considerably weakened. The only company that reported a growth of 1.3% YoY was Maruti but month-on-month even the company’s sales declined by 1.4%.
Analysts say that some of the auto companies have reported their worst performance in 54 months in July this year, even after estimates have been lowered. Maruti had seen volumes fall by nearly 39% in June on inventory clearing, however, despite this in June the sales have declined month-on-month.
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Fortune Financial says that as the fiscal year has progressed, it has cut volume estimates of players like Bajaj Auto, Maruti and Ashok Leyland. The brokerage has retained their full year estimates for Hero MotoCorp. Volumes estimates for M&M and Tata Motors too are likely to be lowered in due course.
Any hope of a turnaround or pick-up in sales now looks dim as the Reserve Bank of India’s actions are clearly no longer supportive of growth or consumer sentiment. From looking at growth, the industry may now look at ways to tide over the slowdown by cutting capacities.
Nomura says that Bajaj Auto’s YoY sales declined 21% in July while it was expecting sales to dip by 13%. Players like Ford in the vehicle segment and Honda Motorcycles & Scooters have reported a growth both month-on-month and year-on-year.
Overall volumes for the automobile industry are expected to decline at a faster pace than expected, believe analysts.