PV and CV recover in January 2017. Passenger vehicle volumes recovered sharply in January 2017 and we reckon industry likely grew by double digits yoy. Commercial vehicle industry, particularly heavy truck industry, also likely grew in single digit in January 2017 mainly led by pre-buying ahead of change in emission norms in April 2017. Two-wheeler volumes are likely to remain weak in the near term due to high proportion of cash sales.
Passenger vehicles: Maruti reports 26% yoy growth in domestic volumes in January 2017
As per our calculations, passenger vehicle industry volumes grew in strong double digit (on yoy basis) in January 2017. Most of the large OEMs have reported strong yoy growth in wholesale volumes. For Maruti, overall volumes grew by 27% yoy in January 2017 led by 26% yoy growth in domestic volumes and 45% yoy growth in exports. Volumes were strong across all segments; event entry segment volumes were up 11% yoy. We note that inventory levels for Maruti were extremely low at the end of December (34,000 units), so wholesale volumes will likely remain strong over the next two months as well. In terms of other OEMs, Hyundai reported 11% yoy growth in domestic volumes, Toyota volumes were up 21% yoy. Ford, Nissan, Renault and Tata Motors also reported double-digit yoy growth in volumes while Honda’s volumes continued to remain weak and declined by 9% yoy.
M&M’s UV volumes down 9% yoy and tractor volumes up 6% yoy in January 2017
M&M reported 6% yoy decline in total volumes in January 2017 as automotive volumes remain weak even there was some growth in tractor segment. Passenger vehicle segment volumes for the company declined by 9% yoy while commercial vehicle volumes were down 3% yoy. Tractor volumes improved by 6% yoy due to strong rabi sowing season.
MHCV industry recovered in January 2017
We reckon MHCV industry volumes (dispatches) grew in low single digits in January 2017 led by pre-buying of trucks due to change in emission norms in April 2017. We could see single-digit growth in industry volumes over the next two months but reckon industry volumes will come under pressure post April 2017 once pre-buying effect is over. In terms of OEMs, Tata Motors reported 8% yoy decline in CV volumes mainly led by steep decline in LCV volumes while Ashok Leyland and Volvo-Eicher CV volumes grew 7% and 11% yoy respectively.
Hero Motocorp reported a steep 14% yoy decline in volumes in January 2017
Hero Motocorp reported a 14% yoy decline in wholesale volumes and we reckon retail volumes also declined by similar levels for the company. The dealer inventory levels are still quite high, ~5 weeks as per our channel checks, thus we expect volumes to remain weak in the next two months. Bajaj Auto and TVS Motors are yet to report their monthly numbers yet but we expect weak volumes from both these companies as well.
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[Kotak] Automobiles, February 1, 2017 – Automobiles – PV and CV recover in January 2017