EUR 120.00 For Business Accounts Only

MOSL: AUTOMOBILES-Wholesales in line across segments; Outperformance by HMCL, but a big miss by RE

AUTOMOBILES: Wholesales in line across segments

Wholesales in the month of Feb-19 were in line with our estimates across segments. PV volumes remained weak but appear to be recovering led by new product launches and low channel inventory. CV volumes declined 4.9% YoY, as growth in LCVs (+3.3% YoY) was offset by lower M&HCV volumes (-11.1% YoY). Tractors volume growth slowed down to 3.3% YoY (-7% MoM) owing to a high base and muted farm sentiment in key markets. In this note, we provide key highlights of the volume trends (including exports) in Feb-19.

** PVs - new products and low inventory drive volumes: PV volumes were weak for the eighth consecutive month in Feb'19, but nevertheless showed signs of a recovery after being hit by negative sentiment due to higher fuel prices, an increase in financing/insurance cost, etc. We note that new product launch in UVs helped MM (PV) wholesales grow 16.6% YoY, while MSIL's dispatches declined 0.8% YoY.

** CVs - drag in volumes led by TTMT: CVs wholesales were in line, with AL and TTMT's volumes trending broadly in line with our estimates. M&HCV volumes declined 11.1% YoY (-1.6% MoM), while LCV volumes grew 3.3% YoY (+7.2% MoM). However, for YTD FY19, both the segment grew in the range of 16-21% YoY. TTMT attributed lower sales primarily to subdued sentiment, high interest rates, the lagged effect of the implementation of revised axle load norms, slowing industrial output and declining IIP growth index.

** Tractors - ESC continues outperforming MM: Tractors volume declined 3% YoY (-7% MoM), led by a high base and muted farm sentiment in key markets. ESC's volume grew 12.7% YoY (+20.8% MoM), continuing to outperform the MM tractor segment, where volumes declined 8.1% YoY (-14.6% MoM).