An employee inspects a Volkswagen automobile in the used car sales area of the Volkswagen AG showroom (Photographer: Krisztian Bocsi/Bloomberg)  

Automakers May See Robust Sales In January

Indian automobile makers may clock strong sales in January on improved demand and consumer sentiment.

That’s the view of most brokerages ahead of release of auto sales numbers tomorrow. The two-wheeler and commercial vehicle makers are expected to post double-digit volume growth also aided by a low base effect due to demonetisation. Commercial vehicle players such as Ashok Leyland Ltd. and Tata Motors Ltd. are expected to post 25-30 percent growth in sales volume on a year-on-year basis

The passenger vehicle segment is also expected to post good growth with market leader Maruti Suzuki India Ltd. seen posting strong double-digit volume growth. Long waiting periods for its Brezza, New Swift, Dzire and Baleno models, and production ramp-up in Gujarat is likely to support volume growth.

Automakers May See Robust Sales In January

Here’s what brokerages had to say on this month’s auto sales:

Nomura

The Japanese brokerage expects 20 percent growth for the medium and heavy commercial vehicles segment on the the back of higher demand, according to its report.

There is a shortage of vehicles as production is not able to ramp up fast enough on the vendors’ ends. We expect this scenario to continue into February-March 2018. Discounts have started to decline, given supply constraints and there could be upside to our margin estimates  should this trend continue.
Nomura Report

View On Monthly Sales Data

Ashok Leyland

  • Low base, healthy demand to aid growth

Bajaj Auto

  • Domestic sales volumes expected to benefit from launch of Discover.Exports to benefit on a low base.

Maruti Suzuki

  • Gujarat plant ramp up and high waiting periods for new car models to drive volume increase.

Tata Motors

  • Medium and heavy commercial vehicles to deliver strong 23 percent year-on-year growth on low base and healthy demand.

Motillal Oswal

The brokerage prefers four-wheelers over two-wheelers and commercial vehicles due to stronger volume growth and stable competitive environment, according to its report.

While it expects two-wheeler volumes to benefit from a rural recovery in the near term, competitive intensity remains high in the segment due to changing customer preferences.

Top Picks
Maruti Suzuki, Tata Motors are Motilal Oswal’s top picks. It also considers Mahindra & Mahindra as the best bet on a rural market recovery.