Public CompanyMaruti, M&M: Strong volume growth continues
Going by the performance so far, Maruti seems to be on track to achieve sales of 1 million vehicles in 2009-10.
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The country’s largest car maker continued its good show, registering 50 per cent year-on-year growth in monthly sales volume (including exports) at 84,804 for December 2009. The company managed to achieve these numbers, which were slightly below its November sales, despite a 10-day planned plant shutdown for maintenance.
Although last year’s low base helped, the increase was on account of a 42 per cent jump in sales in the A2 category (Alto, Wagon R, Zen, Swift, Ritz and A-Star), which accounts for three-fourths of the company"s passenger car sales.
The company has been able to keep the excitement in the A2 category going over the last one year with the launch of A-Star (November 2008) and Ritz (May 2009). Currently, both the Swift and the Dzire continue to have a waiting period due to capacity constraints and higher demand, helping sales in the A2 and the A3 segments respectively.
Maruti Suzuki will showcase about 17 vehicles at the Auto Expo and this includes a six-seater multi-purpose vehicle, Concept R3 and luxury sedan Kizashi, which is to be launched this year.
On the export front, the recovery in Europe (Maruti"s key export market) and the company’s plan to look at alternative markets have helped sales grow over 200 per cent year-on-year to 13,800 units in December. Overall, the company, which achieved sales of 730,000 units in the April to December 2009 period, hopes to breach the million mark before the end of the financial year. Going by the performance so far, it seems to be on course to achieve a 26 per cent volume growth for 2009-10.
Utility vehicle major Mahindra & Mahindra (M&M) also put up a good show, doubling its domestic sales to 22,754 units year-on-year in December 2009. While utility vehicle (UV) sales, comprising of Scorpio, Xylo, Bolero and Pick-Up, grew 120 per cent to about 17,000 units, its light commercial vehicle (LCV) sales, including three wheelers, doubled to 5,447. The encouraging sales in this category has prompted M&M to introduce the Maxximo, an LCV, to bridge the product gap in 0.5- to 1-tonne category. This could give Tata Motors’ Ace, the leader in this category, a run for its money.
While the going has been good so far, with most auto companies expected to report robust numbers for December, the hurdles include withdrawal of the excise cuts, increase in interest rates and pressures on profit margins due to the rise in commodity (steel, aluminium and copper) prices as well as key components, such as tyres. To protect margins (neutralise cost pressures), Maruti and M&M may follow Hyundai, Toyota and Honda, which have announced a 5 per cent increase in prices from January 2010.
On the returns front, the strong sales momentum has meant that the BSE Auto index has given investors 194 per cent over the last one year, comfortably outperforming the Sensex. Going ahead, its performance will depend on the continuation of stimulus measures, ability to protect margins and steady demand.