The India’s automobile sector is yet again on a roll. Inspite of the increasing fuel costs and inflation, the month end figures of major automobile companies indicate a strong domestic demand and thus bright future prospects. The sector is putting greater emphasis on adopting new technologies like advanced engines, hybrid vehicles and a shift towards electric mobility.
Though, the global automobile sector seems weak with US economy not looking too positive, the robust demand from economies like China and India is providing the necessary fuel for the auto companies to keep growing at a scorching pace. China is among the world's largest auto markets. Higher input costs have proved to be a deterrent for the rapid growth of automobile sector but the companies have found a way out. Maruti Suzuki, for instance, is shifting the cost burden to the customers by a price hike in the range of 1% and 1.5%. Other companies too, are following suit. For the month of September, Maruti reported a rise in total sales from 83,306 units to 1,08,000 units including exports of 12,858 units yoy.
TVS Motor too reported an increase in its sales for the month. The company sold 1,85,000 vehicles as against 1,70,000 vehicles on month-on-month basis.
Overall we are getting in quite positive and healthy figures from the companies in the space.
Considering the sales figures from passenger vehicles and commercial vehicles across the companies, it is clear that automobile demand is stronger in the commercial segment versus the passenger segment. This in turn strengthens the argument that the Indian economy is still strong with higher commercial activity taking place and growing further.
Going ahead, we expect automobile sales to go beyond the projections of 12%-13% for 2010-11 as the sales are likely to peak up further during the months of October and November due to festive season.
We see M&M, Ashok Leyland, Escorts, Tata Motors as positive bets.
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