December Sales High for Automobile Industry

Automobile sales saw very high y-o-y sales growth in December [but lower than Novermber-2009], benefiting from economic recovery, improving bank financing and a low comparison base. Two wheeler sales are benefiting from strong farm income and a revival in urban sales.

Here is the Sales Snapshot YoY increase for the Month of December [NOTE – December 2008 can be termed as a Low Base Effect]

  • Hero Honda – 74%
  • Bajaj Auto – 77%
  • TVS Motors – 34%
  • Maruti Suzuki – 50%
  • Mahindra & Mahindra – 100%
  • Tata Motors – 104%

The impact of an excise duty hike should be the least on two wheeler makers as they have about one-third of production coming from factories situated in tax havens. Also, two wheeler makers have taken various price hikes in the last year to protect margins, which gives us confidence that they should be able to protect margins by taking further price hikes, in the event that input costs start rising.