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Auto Sector Monthly

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Monthly Update | March 2011
April 4, 2011 Yaresh Kothari
+91 22 39357800 Ext: 6844 yareshb.kothari@angelbroking.com

Automobile Sector
Steady growth
Automakers maintained their strong volume momentum in March 2011, recording double-digit sales growth. Despite expectations of a slowdown in demand due to higher interest rates and product price increases, volume growth remained buoyant on the back of positive consumer sentiment and heavy discounts offered by OEMs and dealers to clear their year-end inventory. Among the majors, Maruti, Hero Honda, TVS Motor and Ashok Leyland reported better-than-expected numbers for the month. Going ahead, however, hikes in product prices, increased fuel price along with higher interest rates would be the major headwinds that could impact performance of the players. Tata Motors (TML) reported 10.9% yoy (7.5% mom) growth in total volumes, led by better-than-expected numbers in the commercial vehicles (CV) segment. Growth in the CV segment was led by a bounce back in M&HCV and LCV sales, which registered strong growth of 11.8% (30.6% mom) and 23.1% yoy (15.7% mom), respectively. In the PV segment, TML reported a 0.4% yoy (12.9% mom) drop in offtake, largely due to a 40.3% yoy (30.9% mom) decline in Indica dispatches. Nano volumes remained strong, posting 84.9% yoy growth. Ashok Leyland (ALL) posted better-than-expected numbers during the month, registering a strong 20.9% yoy (24.2% mom) increase in volumes to 12,168 units. Volume growth during the month was aided by strong performance from the M&HCV goods segment. Overall domestic M&HCV vehicle volumes grew by 20.5% yoy, while exports posted healthy 11.5% yoy growth. Maruti reported better-than-expected 28.2% yoy (strong 9.2% mom) volume growth to 121,952 units, backed by strong performance in domestic markets. Domestic volumes increased by impressive 38.8% yoy (8.7% mom), while

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