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Auto Sector Eyes Festive Boon

After logging great July sales, the auto sector is expected to vroom in August

The Indian automobile sector has been on a roll, surprisingly, in the new fiscal after facing tremendous amounts of pressure in 2008, which seemingly came to an end on the back of a few good economic numbers, sector-specific retailing changes (including slashing prices) and to an extent falling raw material costs.

According to a report by Morgan Stanley on the Indian automobile sector, growth momentum will remain strong as indicated by the positive result for the month of July in terms of year-on-year (YoY) domestic sales.

Mahindra & Mahindra (M&M) managed to maintain its growth momentum on the back of strong sales from utility vehicles (UV) with numbers rising 46% YoY. The same was the case for tractors, which, adjusted for PTL, were up 21 per cent YoY. M&M sold 2,100 units of the newly-launched Xylo and 3,300 units of old faithful and ever-popular Scorpio.

Maruti Suzuki recorded a 9 per cent month-on-month (MoM) growth with domestic sales going up by 28 per cent YoY. Based on the data disclosed by the company, the A2 segment -- consisting of Alto, WagonR, Swift, A Star and Ritz -- continued to grow, up by 38 per cent YoY. It was the A3 segment --SX4 and D'zire-- that saw an even stronger growth, up 51 per cent YoY. Therefore, it managed to maintain its market share by improving product mix.

Tata Motors strong commercial vehicles (CV) sales numbers helped immensely. M&HCV sales posted a growth of 6 per cent YoY, after a gap of 13 months. LCV (Light Commercial Vehicle) volume growth continued, posting a 44 per cent YoY growth.

Hero Honda posted a 30 per cent YoY growth, while Bajaj Auto and TVS, despite riding on new launches, posted flat to marginal growth in volumes.

According to Morgan Stanley, the outlook for August is positive too. It says that growth momentum will be maintained as the festive season is fast approaching, leading to large-scale stocking by dealers.

How were July Sales?
Companies     Jul-09     YoY     MoM
Mahindra and Mahindra   35,313   36%   -14%
Maruti   78,074   33%   4%
Hero Honda   366,808   30%   0%
Tata Motors - India   46,563   14%   3%
TVS Motors   120,994   2%   5%
Bajaj Auto   192,835   0%   0%
Tata Motors - JLR US   2,607   -25%   -9%
Source: Company Data, Morgan Stanley Research

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