Experts Feel The Auto Sector Is Likely To Witness Growth Going Forward As The Customer Sentiment -g-area meru

Arts-and-Entertainment After a long lull and several quarters of subdued demand, auto .panies are finally seeing a ray of hope with the formation of the new, stable government and are expecting a revival in the sector. The positive sentiment over the formation of a stable government at the Centre immediately had a rub off on Indias Motown and the positive impact is expected to continue for the remaining part of the year as well. The impact of the formation of the new government has already started showing on sales figures. Most car manufacturers have reported an upswing in May sales, barring a few. Buyers shied away from Tata Motors, the largest player by volume, Mahindra & Mahindra, the largest utility vehicles maker, and General Motors. The auto sector has experienced sluggishness for over two years now due to high interest rates, poor in.e growth and high fuel prices and uncertainty in the overall economy. While the passenger vehicle segment may start doing well, it would take longer for the .mercial vehicle (CV) segment to revive, say experts. In the month of May, sales at Maruti Suzuki, Indias largest carmaker, rose 16.4% in the year-ago month. Car buyers showed preference for .pacts like Swift, Estilo and Ritz, whose sales soared 53.9%, while the mini-segment .prising M800, Alto, A-Star and WagonR saw a 7.5% drop in sales from a year ago, the .pany said. There was a 9.8% growth in sales of popular .pact sedan Dzire, but mid-sized sedan SX4 sold 75.9% less against a year ago. Sales of Marutis utility vehicles Gypsy, Grand Vitara and Ertiga rose 22%. Vans – Omni and Eeco – were in demand with sales growing 50.2%. Exports grew 51.2%. Hyundai Motor India, Indias second largest carmaker by sales, reported a 12.8% increase in sales. But exports declined 37.3%. With a volume of 36,205 units, the growth was in line with this years objective of growing market share and volume, said Rakesh Srivastava, senior sales and marketing vice-president at Hyundai Motor India in a statement. Srivastava claimed the phenomenal success of Xcent, Grand and Santa Fe increased volumes and created a positive momentum. We expect to maintain the trend by strengthening our product portfolio and improving channel efficiencies, he added. Monthly domestic sales at Honda Cars India, a premium car manufacturer, grew 18%, which were attributed to the success of all-new Honda City and strong sales momentum for Honda Amaze. The .pany clocked an overall growth of 23% during the April-May period. We have been receiving good response for Amaze and the all-new City cars. We will continue to do well in the respective segments, said Jnaneswar Sen, senior VP marketing and sales at Honda Cars India. It will soon enter the multi-purpose vehicle (MPV) segment with the planned launch of a mid-sized seven-seater Honda Mobilio. Ford India claimed 51% growth in sales, up from 4,002 cars last year. The .pany exported 6,235 vehicles, against 1,991 units in the year-ago period. Total sales, including exports, doubled to 12,288 units during the month. A stable government is positive for overall economic and business sentiment. We hope the new government will support the ongoing industry-friendly initiatives, like the excise duty cut, and look at further measures to improve consumer sentiments, the .pany said. The .pany is looking forward to the introduction of GST, rationalization of taxes and more foreign investment to promote sustained growth of the economy and the automotive sector. Domestic sales of Toyota Kirloskar Motor jumped 18% in May. We have resumed normal production and registered growth in May. We launched Etios Cross and the all-new Corolla Altis last month, N Raja, director and senior vice-president for sales and marketing at Toyota Kirloskar Motor, said in a statement. He claimed very good response for the new launches. Toyota sold 555 units of Etios Cross and 548 units of the Corolla Altis in May. But the sales of Tata Motors continued to fall. In May, sales fell 17% from a year ago. Sales of Nano, Indica and Indigo slumped 22%. Tatas Sumo, Safari, Aria, Venture range showed promise, growing 4%. It was the first growth for the segment since November 12. In the CVs segment, Tata Motors domestic sales declined 27%. Experts said that consolidated sales of Tata Motors may be over 1 million units for 2015, which includes a 4.3% fall in India volumes and strong increase of 12.5% in Jaguar Land Rover (JLR) volumes. Also, owing to the deferred tax benefits arising from UK operations, which helped lower the effective tax rate of 25% in 2014, tax rate across five-year forecast period is likely to fall to 27%, from 30%. Tatas narrow economic moat is supported by the strength of the JLR brands, which .mand premium pricing and the cost advantages enjoyed by Tatas Indian business arising from low labour costs and favourable tax structure. But growing .petitive intensity in the Indian passenger and .mercial vehicle market, and increasing capacity in the global automotive market is a cause of concern for the .pany. As excess capacity increases, the potential for irrational pricing behaviour will also expand, which will eventually threaten operating leverage, profit margins, and excess returns of the .pany. Experts feel going ahead, headwinds in the standalone business is expected to continue in the near term due to weak macro-economic environment, which is expected to continue impacting domestic volumes. However, JLR is expected to sustain its strong performance driven by continued momentum in the global luxury vehicle market and aided further by the strong product launch pipeline and the success of the newly launched models. The countrys largest utility vehicle manufacturer, Mahindra & Mahindra, reported a 19% drop in sales of passenger vehicles, including utility vehicles and the Verito, to 18,085 units. But exports soared 75% to 2,370 units from 1,356 last year. Auto sales continued to be subdued for many players, said Pravin Shah, chief executive, automotive division at Mahindra & Mahindra. He said the .pany expected improved sentiments to result in a better economic situation, which would lead to a gradual increase in demand. Announcing the .panys January-March 14, results, Pawan Goenka, president of the automotive farm equipment and two-wheeler segments of the group, said the auto industry is passing through challenging times and demand continued to remain under stress in the quarter. However, going forward, the scenario is expected to improve with the formation of a stable government and focus on infrastructure, which would help the economy to revive. The customer sentiment is also changing. M&M expects the economy to see a turnaround in growth in 2014-15. Despite El Nino risks clouding the outlook for agriculture, we expect to witness a nascent, infrastructure and manufacturing-led economic recovery in 2014-15, said Goenka. In January-March 14, on a consolidated basis, M&Ms net profit rose 13.8% from a year ago. Gross revenues and other in.e of the .pany grew 5.9% from a year ago. Sales at General Motors India fell 43% in May from last year. These included units of Beat, Tavera and Chevrolet Enjoy. The industry has been passing through challenging times for the past two years, as the general economic and consumer sentiments have failed to pick up, P Balendran, VP at General Motors India, said. He hoped to see some improvement in the .ing months. Experts feel the sector is likely to witness demand growth going forward; mainly in the passenger vehicle segment as the customer sentiment is upbeat with the formation of the new government. Already, there has been a significant rally in the Sensex post the election results and formation of the new government. As the economy is expected to revive from the second half of this financial year, experts believe growth will revive across sectors. But this could result in roll back of discounts by auto .panies. Discounts were at an all-time high in the last few quarters as auto .panies tried to lure customers to increase sales. It would be difficult for them to sustain margins with such high level of discounts, experts said adding once sales revive, .panies will try to roll-back the discounts. Post-monsoon experts feel discounts would be rolled back and this festive season would turn-out to be good for the sector with revival in sales. Margins of the .panies are expected to improve going forward not only because of the rollback of discounts but input costs are expected to remain stable, experts added. However, a turnaround in the CV segment will be slow, as per a report by India Ratings & Research. A recovery in terms of fleet utilization and improved margins for vehicle operators similar to FY09 level looks unlikely before 1QFY16. This slowdown in the .mercial vehicle space is driven by a slowdown in industrial production and insufficient contraction in .mercial vehicle sales. The demand-supply mismatch would not return to the FY09 level before 1QFY16 even if the Index of Industrial Production grows 6% and medium and heavy .mercial vehicles sales remain flat. The existing surplus capacity needs to be absorbed before the sector can witness any significant .mercial vehicle sales without hurting asset quality, said Jatin Nanaware, director, Structured Finance at India-Ratings. Higher .mercial vehicle sales growth on the expectation of an improving economic scenario could slow down the recovery, added Nanaware. About the Author: 相关的主题文章: