Auto stocks beaten by November sales volume; Maruti dn 9.4%

MUMBAI: The BSE Auto Index on Monday dipped by 4.64 percent to stand at 2,222.33 while the Sensex was down by 2.78 percent at 8,839.87. The dipping sales volume for November of the three major auto makers���Maruti Suzuki,

Bajaj Auto and TVS Motors--led to hammering of the sector on the market.

While Bajaj Auto's volumes were sharply lower by 32 percent for November this year at 159,747 vis-a-vis 235,797 in the same month last year, sales of Maruti Suzuki fell last month by 24 percent to 52,711 units from 69,699 units in the same period last fiscal and TVS Motor's November sales numbers dipped by 13 percent to 99,402 units from 112,766 units on YoY basis.

Analysts feel that the outlook for the auto sector is bleak for at least 3-6 months and believe that the commercial vehicles sales will lead to the downfall in sales volumes for auto makers.

"Downfall of Maruti was higher than expected by me," said analyst Vaishali Jajoo of Angel Broking, adding that she was expecting decline in the sales volumes of commercial vehicles, especially of Tata Motors and Ashok Leyland.

���Two wheelers do not have a very positive outlook either," she further said.

General inflationary trend, liquidity crunch and the continuing adverse impact of rising interest rates restricted the availability of retail finance, hurting sales said TVS in a statement.

Slowdown of the economy has hit the auto sector hard with lesser sales volume in the domestic market, but exports have been a comparative relief. While Bajaj's export volumes grew by 46 percent at 67,397 units compared to 46,295 units in the same period last fiscal, even Maruti's exports grew by 12 percent from 4483 units in November last fiscal to 5007 YoY basis. TVS exports also doubled from 10,408 to 20,911 YoY.

However, Komal Iyer of Sharekhan said that the dip looked sharper because of the higher base last year. "But the auto sector is not likely to pick up for another 3 to 6 months," she added.

Bajaj Auto MD, Rajiv Bajaj, however, has said in the company's statement that the company intends to counter this trend by an intense new product initiative that will see the launch of a new motorcycle each month for 6 months beginning January 2009.

In the meantime, Bajaj Auto Finance has introduced an extremely attractive 7.99 percent low interest retail finance scheme nationwide across almost 300 Bajaj dealers to revive sales in the short term, said Mr Bajaj.

Stagnant 3-wheeler sales reflect the subdued state of the commercial vehicle industry, he however, added.

Maruti Suzuki and Bajaj Auto closed on the BSE in the red atRs.485.50 and Rs.306.95 respectively, down by 9.4 percent and 4.33 percent each. TVS closed at Rs.23.10 today, 0.22 percent higher but close to its 52-week low price of Rs.22 on the BSE.