Car Stocks Drop on Weaker December Sales; Analysts Are Disappointed by PV and Tractor Data

Tuesday saw a 1.9% decline in Nifty Auto, one day after the majority of automakers released weaker December sales statistics. By lunchtime, the gauge had dropped 1.5% and all of its components were losing money. TVS Motor Co. (3.3%), Ashok Leyland Ltd. (3.36%), and Eicher Motors Ltd. (3.86%) lead the decline. The following companies saw declines: Hero MotoCorp Ltd., Samvardhana Motherson International Ltd., Sona BLW Precision Forgings Ltd., and Mahindra & Mahindra Ltd.

By contrast, as of 12:57 p.m., the benchmark Nifty 50 was down 0.51%.

BofA Worldwide Research:

The weak sales results for December were caused by base catch-up, channel inventory destocking, and low seasonality. The annual decline in personal vehicle dispatches was 4.5%. A delay in the harvest season caused a 17% fall in the tractor market, which disappointed. Even though exports take time to recover, two-wheelers are experiencing strong domestic sales and are in recovery mode. Escorts, Eicher, M&M, and Maruti Suzuki India Ltd. are not happy. TVS Motor and Bajaj Auto Ltd. reported year-over-year sales rise of 25–30%, however Eicher Motors was not happy with the sales of their two-wheelers.

BNP Paribas

In December, strong sales from the holiday season persisted. PVs had consistent annual growth, whereas domestic two-wheelers had robust growth on a shaky foundation. Due to a lacklustre December in agriculture, tractor volumes fell by mid-double digits. Three-wheelers maintained a strong growth trend while commercial vehicle volumes decreased. Market share was increased by Mahindra & Mahindra and Tata Motors Ltd. Market share loss was greatest for Maruti Suzuki. Based on projections made by the brokerage, RE lost market share while Bajaj Auto and TVS Motor gained.



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