 "Mixed fortunes for Maruti and Mahindra in December")
Automobile sales are not showing any sign of a pick-up. Of the big boys that reported their monthly sales numbers for December, the headline numbers of Mahindra & Mahindra (M&M) and Maruti Suzuki come below estimates. Maruti’s overall sales volumes declined 4.4 per cent year-on-year (y-o-y) and M&M reported a 5.7 per cent decline in volumes.
Sluggish demand for diesel vehicles and competition from Renault’s Duster and Ford’s Ecosport have hurt utility vehicle (UV) sales of Maruti and M&M. Maruti’s UV volumes fell 5.7 per cent y-o-y in December and M&M’s UV sales declined 28 per cent. Exports of both companies have also fallen with demand being hit in their other markets, too.
However, not all segments are reporting sluggish growth. In the first nine months of the current financial year, Maruti has seen a pick-up in its mini segment (Alto, A-Star and WagonR). In the first nine months of FY14, Maruti’s mini segment has grown eight per cent y-o-y, while the compact and utility vehicle segment has seen volumes dip.
While analysts expect a mild recovery in volumes in the second half of FY15, till then the mini and compact segments would help prop up Maruti’s headline numbers. Maruti is expected to end FY14 with flat volumes. In the first nine months, the firm reported a 0.3 per cent volume growth. However, FY15 could see a 15 per cent growth in volumes, if interest rates start easing.
For M&M, it is the tractors segment that is helping the company in these difficult times. Yaresh Kothari of Angel Broking says the tractor segment sustained its strong growth traction, reporting an increase of 15.4 per cent y-o-y on the back of good monsoons and better agriculture output. Tractors have grown at 21 per cent in the first nine months of FY14 and the trend is expected to sustain, as the trend of farm mechanisation continues to remain strong. Mitul Shah of Karvy Stock Broking estimates the overall tractor industry to grow by 12-15 per cent in FY14 and FY15.
The shortage of farm labour has forced many farmers to opt for mechanisation. The company is expected to end the year with tractor volumes of 19 per cent in FY14 and 15 per cent in FY15. However, the automotive segment is unlikely to show any major recovery in FY15, as M&M has not lined up any major launch over the next 12 months. Kothari expects M&M’s overall volumes to grow 10 per cent in FY15, which would be largely driven by tractors.
Sluggish demand for diesel vehicles and competition from Renault’s Duster and Ford’s Ecosport have hurt utility vehicle (UV) sales of Maruti and M&M. Maruti’s UV volumes fell 5.7 per cent y-o-y in December and M&M’s UV sales declined 28 per cent. Exports of both companies have also fallen with demand being hit in their other markets, too.
However, not all segments are reporting sluggish growth. In the first nine months of the current financial year, Maruti has seen a pick-up in its mini segment (Alto, A-Star and WagonR). In the first nine months of FY14, Maruti’s mini segment has grown eight per cent y-o-y, while the compact and utility vehicle segment has seen volumes dip.
While analysts expect a mild recovery in volumes in the second half of FY15, till then the mini and compact segments would help prop up Maruti’s headline numbers. Maruti is expected to end FY14 with flat volumes. In the first nine months, the firm reported a 0.3 per cent volume growth. However, FY15 could see a 15 per cent growth in volumes, if interest rates start easing.
For M&M, it is the tractors segment that is helping the company in these difficult times. Yaresh Kothari of Angel Broking says the tractor segment sustained its strong growth traction, reporting an increase of 15.4 per cent y-o-y on the back of good monsoons and better agriculture output. Tractors have grown at 21 per cent in the first nine months of FY14 and the trend is expected to sustain, as the trend of farm mechanisation continues to remain strong. Mitul Shah of Karvy Stock Broking estimates the overall tractor industry to grow by 12-15 per cent in FY14 and FY15.
The shortage of farm labour has forced many farmers to opt for mechanisation. The company is expected to end the year with tractor volumes of 19 per cent in FY14 and 15 per cent in FY15. However, the automotive segment is unlikely to show any major recovery in FY15, as M&M has not lined up any major launch over the next 12 months. Kothari expects M&M’s overall volumes to grow 10 per cent in FY15, which would be largely driven by tractors.