Auto sales for FY’19 started on a strong note. During April 2018, demand remained robust across key segments, including, passenger vehicles, two-wheelers and tractors, driven by recovery in rural sentiment, positive response to new models, normal monsoon forecast and sales during Akshaya Tritiya (auspicious period). Industry leader MSIL dispatched 1,65,000 vehicles in the domestic market, posting 14 per cent YoY growth, while M&M, Hyundai and Ford vehicle (PV) sales grew by 13 per cent/4 per cent/-3 per cent YoY, respectively. Tata Motors posted 34 per cent growth on robust demand for its recently launched compact SUV - Nexon. In the two-wheeler segment, Bajaj Auto, TVS and Eicher Motors (RE) reported strong double-digit growth in dispatches, with sales up 19 per cent/ 22 per cent/ 27 per cent YoY, respectively (including domestic and exports). The three-wheeler segment (domestic + exports) continued its strong growth trajectory. In the commercial vehicle (CV) segment, Tata Motors and Ashok Leyland posted 126 per cent/76 per cent growth (on an abnormally low base of sales during Apr’17 due to preponement of demand in Mar’17 led by emission norm change). In the tractors segment, M&M posted 19 per cent YoY domestic growth, while Escorts grew 28 per cent.

Passenger vehicles 

New models, robust rural demand and sales during Akshaya Tritiya (Apr’18) led to positive sales momentum continuing in the PV segment. Industry leader MSIL dispatched 1,65,000 units in the domestic market, reporting 14 per cent YoY growth. Compact segment (Celerio, Baleno, Dzire, Swift, etc.) grew 32 per cent YoY, led by positive response to the recently-launched new Swift, with a waitlist of 6-8 weeks. Utility vehicle (UV) sales were flat YoY due to high base for Ertiga sales during Apr’17 (6,700 units). Sales in the mid-size segment (Ciaz) declined 27 per cent due to increase in tax on hybrid vehicles and possibly due to the introduction of Toyota Yaris. MSIL exports grew by 19 per cent YoY. M&M, Hyundai and Ford reported domestic sales growth of 13 per cent/ 4 per cent/ -3 per cent YoY, respectively. Tata Motors’ domestic PV sales were up 34 per cent YoY, driven by strong growth for Tiago hatchback and compact SUV Nexon. Toyota’s domestic sales were flat YoY. Bookings for the Toyota Yaris commenced during the month. In terms of pricing, Yaris is priced head-to-head with the Honda City, and with a steep premium over the MSIL Ciaz.

Two-wheelers 

In two-wheelers (2W), Bajaj Auto reported total motorcycle sales of 3,50,000 units (domestic + export), with 19 per cent growth YoY primarily led by positive rural sentiment and sales during Akshaya Tritiya. Domestic motorcycle sales stood at 2,00,000 units (up 24 per cent YoY). Overall growth was also aided by improving three-wheeler sales in both domestic and the export market. On an MoM basis (domestic + export), 2W volumes increased by 30 per cent. TVS Motors posted 32 per cent/10 per cent YoY growth in motorcycles/scooters respectively. Overall growth, including 3Ws, stood at 24 per cent. Royal Enfield (RE) sales stood at 76,200 units, up 27 per cent YoY. In greater than 350cc category, RE sales grew by 60 per cent to 6,000 units, driven by increased traction for revamped Thunderbird (in 500cc version).

Commercial vehicles

The commercial vehicle segment witnessed healthy sales growth on an abnormally low base of Apr’17 (due to preponement of demand in Mar’17 led by shift to BS-IV norms). MHCV sales are supporting the CV sales, driven by replacement demand, demand for auto carrier, construction transportation, cement & steel transportation, and shift to higher tonnage vehicles following ban on overloading. Consequently, Tata Motors’ MHCV (Goods) segment grew 317 per cent YoY to 14,028 units. Ashok Leyland’s MHCV sales grew 98 per cent YoY, while the LCV segment posted 45 per cent growth, driven by demand at spokes (under GST: Hub & Spoke) and last mile connectivity demand arising from growth in ecommerce category. VECV CV (goods) reported growth of 57 per cent YoY. However, there is MoM decline across CV players due to seasonally lower sales during April. In the tractor segment, M&M and Escorts reported 19 per cent/ 28 per cent YoY domestic growth, respectively. Tractor industry sales are expected to grow 8-10 per cent during FY19.

—Source: JM Financial