The worst slowdown in auto sales is finally over and guess who is the biggest gainer?

#1
All the while that Maruti Suzuki India was battling irate investors over the proposed Gujarat subsidiary last month, its dealers continued to do brisk business. The company finally agreed to get minority shareholders' nod for this controversial proposal and made some other changes to it too. Is this the reason why dealers managed to sell almost double the number of cars in March compared to retail sales in the previous two months? Most likely not. Investors and car buyers rarely think alike. But this retail success points to two things: the worst downturn in recent memory in passenger car market may be receding and Maruti may be the biggest beneficiary of any uptick in car sales.

Given the importance of India in Suzuki Motor Company's global sales graph, the Japanese parent of Maruti was wise in deciding to deescalate the tensions with small investors. After all, Maruti remains its cash cow.

Analysts say Maruti has likely retailed 1.3 lakh cars in March, double the retail sales it reported in either January or February this year. The numbers will be revealed only tomorrow and Maruti may then stick to the usual practice of just reporting wholesale numbers, which depict dispatches from its factories to dealers, instead of sales to actual customers.

Jinesh Gandhi and Chirag Jain of Motilal Oswal have said in a note to clients on Friday that Maruti's retail sales (which means sales from showrooms to customers) was estimated to 1.3 lakh units in March, nearly twice the January-February average of 70,000 units. The two analysts said increased discounts in March versus February coupled with excise duty reduction, which was announced in the interim Budget, have lead to this happy situation.

Karvi Stockbroking's Mitul Shah and Maruti Kadam said in a recent report that Maruti has already won back some lost market share through FY14 and is expected to further strengthen its share by 100-120 basis points next fiscal. The Karvy analysts also saud that this company will be able to maintain its margins as it continues to empahsis on increased localisation and expanding overseas base lowers currency risks.

Gandhi and Jain of Motilal said in the first two months of this calendar year, Maruti added 55,000 units to its inventory but with brisk March sales, this should get down to normal levels of a month's inventory.

The Celerio AMT, which was billed as a segment first and launched at the beginning of the year, has seen good success rate with monthly numbers of anywhere between 10,000-12,000 uniits, according to Maruti officials. Karvy analysts said the AMT (automatic manual transmission) variant of Celerio now comes with a 9-month waiting period. Motilal analysts said the waiting period is 4-5 months.

But even as retail sales remain brisk, wholesale numbers will likely show a 5% year-on-year drop for Maruti in March on a 20% decline in export volumes.

This article taken from firstbiz : http://www.firstbiz.com/corporate/w...nally-guess-emerged-biggest-gainer-80773.html
 

Similar threads