During March, auto volumes in passenger vehicles remained steady while two-wheeler and commercial vehicles reported better sales, says Nomura

Auto volumes in March did not show any negative surprises and were mostly in line with expectations from research analysts. "Domestic car industry volumes declined by about 4%, largely in line with our expectations of 2-3% decline, as per our calculations. Two-wheeler industry volumes increased around 23%, above our expectation of 17-18% growth, largely led by stronger-than-expected performance from Honda Motorcycles (HMSI). Medium and heavy commercial vehicle (MHCV) industry volumes declined about 20%, better than our expectation of 27% decline while light commercial vehicle (LCV) volumes declined by around 35% as against our estimate of 35-40% decline," says Nomura in a research note.

Car industry volumes down 4% in March

Nomura said as per its calculations, overall industry volumes are down 4%; largely in line with its estimates of 2-3% decline. New launches continue to drive growth for the original equipment manufacturers (OEMs) – Celerio for Maruti Suzuki India Ltd (MSIL) and Amaze and new City for Honda. The newly launched Datsun GO sold around 2,000 units in just 13 days in March. "Maruti has been able to maintain its market share at around 50%, which is quite positive, in our view," Nomura said.

Among the unlisted companies, Ford has reported only 20% growth despite the launch of EcoSport, suggesting steep decline in sales for existing models like Figo and Fiesta. General Motors (GM) volumes were also down sharply while other OEMs like VW and Renault have not reported yet but we expect weaker volumes due to lack of new models. Toyota volumes declined sharply by 58% partly due to labour issues at its plants, in our view, the research note added.

Two-wheeler industry volumes up 23%

Nomura said, overall two-wheeler industry volumes are likely up 23% in March as against its expectations of 17-18% growth.

While Hero MotoCorp (HMCL) and Bajaj Auto reported largely in-line numbers; all other OEMs like Honda Motorcycles and Scooters India Ltd (HMSI), TVS and Yamaha have reported stronger set of numbers. HMSI volumes increased by 55%, as against Nomura's expectation of about 40% growth.

"Scooter volumes (for HMSI) increased 53% to 2.02 lakh units and bike volumes were up to 1.90 lakh units. This could have been helped by the company offering free 0.5 gram gold coins worth Rs1,500 for Dream series bikes. Honda Shine volumes increased to 94,000 units in March as compared to run-rates of 60,000-70,000 units seen over the past few months," Nomura said.

As per HMSI management, it had 28% market share in the domestic two-wheeler market in March (24-26% over past six months) – the highest ever for the company. This highlights market share loss for incumbents HMCL and Bajaj Auto, Nomura added.

MHCV, LCV volumes down in March

According to Nomura, in MHCVs, there was some improvement in run-rates from last month for all OEMs, Tata Motors, Ashok Leyland and Eicher Motors. "This was likely helped by a cut in excise duties and higher buying by companies to avail depreciation benefits at year-end, in our view. Overall, MHCV industry volumes are down by about 20% as against our expectation of 27% decline. SAAR is indicating flat volumes for the industry in FY15F, in line with our estimates," it said.

LCV industry volumes likely declined by 35% as against expectation of 35-40% decline, Nomura added.