“Indian automobile industry’s performance during the month of August’11 mirrored the trend of the last few months with passenger vehicles segment reflecting weak demand. On the other side, 2-wheelers segment continued to witness brisk demand. The surprising part is the resilience shown by medium and heavy commercial vehicle segment (MHCV) despite higher interest rates and concerns regarding economic growth, as it continues to report growth on a high base of last year. Our interaction with dealers suggests that despite the onset of festive season, the enquiries and footfalls at passenger vehicle dealerships’ remain weak.”
“Maruti Suzuki (MSIL) launched its new ‘Swift’ and despite strong bookings, the company failed to capitalise on the same due to labour problems at Manesar plant. Honda is expected to launch its compact car ‘Brio’ while Toyota is likely to introduce diesel engines on ‘Etios’ and ‘Liva’ during the month of September. Commercial vehicle dispatches remained strong with higher demand for both small commercial vehicles and MHCV despite concerns over economic growth and higher interest rates. 2-wheeler dispatches are in a stark contrast to passenger vehicles with demand remaining robust and top manufacturers having low pipeline inventory.”
“We expect passenger vehicle demand to remain soft during the upcoming festive season on a high base of last year. However, on a sequential basis, we expect improvement in demand. We revise our target price on Hero MotoCorp and BJAUT to Rs2,000 and Rs1,850 discounting FY13E earnings 15.5x and 15x respectively. Our top picks in the sector are Ashok Leyland, Bajaj Auto and Mahindra & Mahindra.
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“Maruti Suzuki (MSIL) launched its new ‘Swift’ and despite strong bookings, the company failed to capitalise on the same due to labour problems at Manesar plant. Honda is expected to launch its compact car ‘Brio’ while Toyota is likely to introduce diesel engines on ‘Etios’ and ‘Liva’ during the month of September. Commercial vehicle dispatches remained strong with higher demand for both small commercial vehicles and MHCV despite concerns over economic growth and higher interest rates. 2-wheeler dispatches are in a stark contrast to passenger vehicles with demand remaining robust and top manufacturers having low pipeline inventory.”
“We expect passenger vehicle demand to remain soft during the upcoming festive season on a high base of last year. However, on a sequential basis, we expect improvement in demand. We revise our target price on Hero MotoCorp and BJAUT to Rs2,000 and Rs1,850 discounting FY13E earnings 15.5x and 15x respectively. Our top picks in the sector are Ashok Leyland, Bajaj Auto and Mahindra & Mahindra.
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