Sector Update INDIA AUTOMOBILES 18 March 2016 India Automobiles: Model Watch UV, motorcycle sales zoom on new launches PV sales for the month of Feb’16 rose 2% YoY as UV volumes jumped 21% YoY on a slew of new launches in the compact UV segment (Creta, KUV100, TUV300). Car sales however fell 4% amid a slowdown in the compact segment (-5% YoY). In 2Ws, REPORT AUTHORS motorcycle sales grew 11% off a low base and new 125-150cc segment launches. Scooters grew 18% YoY as Honda’s new Mihir Jhaveri +91 22 6766 3459 Gujarat plant went on-stream in January. Picks: HMCL, EIM, AL. [email protected] Siddharth Vora UVs surge 21%; momentum to improve further: PV sales for Feb’16 +91 22 6766 3435 grew 2% YoY aided by a 21% growth in UV volumes, while car volumes [email protected] declined (-4% YoY) for the second month in a row (Jan’16: -1 YoY) after 14 months of growth. The sub-4.4m UV segment grew 39% YoY/4% Model-wise market share change YoY/MoM TTM share Feb-16 YoY MoM Segment MoM during Feb’16 with Hyundai Creta leading the pack at 8.2k units, (%) share (%) (bps) (bps) followed by Mahindra Bolero at 7.4k units (-13% YoY/21% MoM) and Mini Maruti Ertiga at 5.6k units (+3% YoY/-3% MoM). Mahindra’s new Alto 49.6 43.8 -1,044 -322 Wagon R 31.7 29.2 -100 132 compact UVs KUV100/TUV300 sold 4.5k/2.6k units. KWID 5.9 15.5 1,553 241 Compact The mood has swung in favour of UVs amid a slew of new launches, Swift 31.1 32.6 -4 401 Grand i10 19.8 18.8 424 -146 while cars are seeing a lull – a situation paradoxically opposite six Celerio 13.2 10.8 -49 -371 months ago. We expect a continued upward spiral in UV volumes over Super Compact* the near term with the launch of Maruti Vitara Brezza. Dzire 37.4 33.7 -562 62 Elite i20 20.8 19.8 -388 168 Baleno 6.1 13.3 166 -163 Car volumes decline further: In the mini PV segment, production Jazz 6.0 6.5 651 -234 ramp-up in Renault KWID (Feb’16: 7.5k units) hit sales of Maruti UVs Alto/WagonR/Hyundai Eon (-17%/-1%/-23% YoY). In the super Creta 9.7 15.2 1,515 201 Bolero 14.7 13.8 -521 148 compact segment, production-led constraints continued for Maruti, Ertiga 10.4 10.4 -163 -118 making it difficult to decipher the actual demand for its models. During Scorpio 8.6 7.5 -310 -43 the month, Swift sold 15.5k units (-21% YoY/ +10% MoM), Dzire 17.4k Innova 10.1 9.1 -237 245 TUV300 3.7 4.9 487 -274 units (passenger + tour; +2% YoY/-1% MoM) and Baleno 6.9k units, Scooters while Hyundai Elite i20 did 10.2k units (-1% YoY/+6% MoM). Activa 49.3 48.2 26 4 Maestro 10.1 9.8 -175 -117 Jupiter 10.5 10.9 162 113 Motorcycle sales buoyed by new launches: Motorcycle sales grew by Motorcycles 11% YoY (-2% MoM), albeit off a low base. The 75-110cc segment 75-110cc (59% of total sales) grew by 3% YoY/-1% MoM helped by Hero’s trio, Splendor 37.2 37.5 24 -152 Passion 17.3 16.2 -343 46 Splendor, Passion and HF Deluxe which grew by 6% YoY (-2% MoM) to HF Deluxe 16.9 21.1 539 11 378k units. Bajaj’s combined sales for CT100 and Platina grew by 9% CT100 8.5 8.5 713 206 YoY (+15% MoM) to 59k units. 110-125cc CB Shine 45.7 41.4 -1,172 -556 Glamour 37.8 43.2 817 450 The 125-150cc segment has seen a revival (+12% YoY/+13% MoM) with Discover 7.8 7.3 359 -6 the launch of new Avenger 150 (18.2k units) and the re-launch of CB 125cc-150cc Unicorn (7.7k units). The 250cc and above segment grew by 59% YoY Pulsar 49.2 36.2 -378 -445 FZ 22.7 19.9 -346 -346 helped by a 61% growth in Royal Enfield volumes. Avenger 150 5.3 19.7 1,969 42 150cc-250cc Scooters up 18% YoY: Commencement of operations at Honda’s new Apache 32.4 30.0 -109 -55 CB Hornet 160R 0.8 20.2 2,016 92 scooter plant in Gujarat led to a 10% YoY growth in sales, pushing up Avenger 220 9.7 16.6 1,046 -150 overall scooter growth to 18% YoY during February. Honda’s Activa Pulsar (150-200cc) 13.0 9.7 -169 -57 grew 18% YoY to 210k units. Hero’s Maestro (42.8k units)/Duet (31.5k *Baleno, Jazz, Elite i20, Xcent Amaze, Figo Aspire, Zest grouped under Super Compact | Note: Unless otherwise specified, all units) are showing good momentum too. TVS Jupiter did 47.8k units. exhibits in this report have the same source – SIAM, RCML Research. This report has been prepared by Religare Capital Markets Limited or one of its affiliates. For analyst certification and other important disclosures, please refer to the Disclosure and Disclaimer section at the end of this report. Analysts employed by non-US affiliates are not registered with FINRA regulation and may not be subject to FINRA/NYSE restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account. India Automobiles: Model Watch Sector Update UV, motorcycle sales zoom on new INDIA launches AUTOMOBILES Sales and share trends Passenger cars Fig 1 - Sales trend in Mini segment Fig 2 - Volume share change in Mini segment (FY16TD) (units) Wagon R Alto Eon KWID (bps) Mini segment 35,000 900 641 30,000 700 25,000 500 20,000 300 102 15,000 100 10,000 (100) (94) 5,000 (300) (234) 0 (500) (414) (700) Jul-14 Jul-15 Oct-14 Oct-15 Apr-14 Apr-15 Jun-14 Jan-15 Jun-15 Jan-16 Mar-15 Feb-15 Feb-16 Nov-14 Dec-14 Nov-15 Dec-15 Aug-14 Sep-14 Aug-15 Sep-15 May-14 May-15 Others Eon Alto Wagon R KWID Sales of Alto/Eon declined by 17% /23% YoY (-1%/+2% MoM) with Renault KWID gaining ground and doing 7.5k units in the month. WagonR sales were more resilient, declining by 1% YoY (+12% MoM). Overall, mini segment sales grew 3% YoY due to the entry of Renault KWID. Fig 3 - Sales trend in Compact segment Fig 4 - Volume share change in Compact segment (FY16TD) Swift i10 Figo (units) (bps) Compact segment Celerio Ritz Grand i10 20,000 600 488 500 400 290 15,000 300 200 100 14 22 10,000 0 (100) (5) (73) (39) 5,000 (200) (129) (91) (300) (202) (276) (400) 0 i10 Ritz Brio Figo Polo Beat Swift Indica Others Celerio Jul-14 Jul-15 Oct-14 Oct-15 Apr-14 Apr-15 Jun-14 Jan-15 Jun-15 Jan-16 Mar-15 Feb-15 Feb-16 Nov-14 Dec-14 Nov-15 Dec-15 Aug-14 Sep-14 Aug-15 Sep-15 Grand i10 May-14 May-15 Constrained by capacity, Maruti models continue to show a decline post launch of Baleno; Swift/Celerio declined 21%/24% YoY (+10%/-28% MoM). Growth for Hyundai’s Grand i10 also slowed to 8.9k units, +2% YoY/-10% MoM. Fig 5 - Sales trend in Super Compact* segment Fig 6 - Vol. share change in Super Compact* (FY16TD) (units) Dzire Amaze (R) Xcent (R) (units) (bps) Super Compact segment 26,000 Elite i20(R) Baleno (R ) Jazz (R ) 15,000 1,000 725 739 751 24,000 13,000 800 22,000 11,000 600 20,000 366 9,000 400 18,000 200 7,000 4 16,000 0 5,000 14,000 (200) (81) 12,000 3,000 (400) 10,000 1,000 (302) (408) (600) (454) Xcent Amaze Dzire Zest Etios Figo Jazz Baleno i20 Jul-14 Jul-15 Oct-14 Oct-15 Apr-14 Apr-15 Jun-14 Jan-15 Jun-15 Jan-16 Mar-15 Feb-15 Feb-16 Nov-14 Dec-14 Nov-15 Dec-15 Aug-14 Sep-14 Aug-15 Sep-15 May-14 May-15 Sedan Aspire *Jazz, Elite i20, Amaze, Xcent, Zest, Figo grouped under Super Compact for better comparison Helped by new launches, the super compact segment has grown by 19% YoY. Sales of recently-launched Maruti Baleno have fallen to 6.9k units from 10.6k units in December. Media reports claim 100,000 bookings and up to 8 months of waiting period 18 March 2016 Page 2 of 13 India Automobiles: Model Watch Sector Update UV, motorcycle sales zoom on new INDIA launches AUTOMOBILES for Baleno, which clearly indicate the capacity constraints currently faced by MSIL. Hyundai’s Elite i20 sold 10.2k units, slightly below its last twelve-month average of 10.8k units. Honda’s recent facelift of Amaze failed to create excitement with sales at 4.1k units (-43% YoY/ +17% MoM). Dzire sales have also declined 4% YoY to 13.9k units while the tour variant continues to do 3.5k units a month. Honda Jazz and Hyundai Xcent did 3.4k units and 4.2k units for the month. Utility vehicles Fig 7 - Sales trend in UV (rural/semi-urban) segment Fig 8 - Volume share change in UV segment (FY16TD) (units) Bolero Scorpio Innova (bps) UVs segment 1,200 1,066 12,000 Mobilio Ertiga 10,000 800 412 413 8,000 400 173 6,000 8 0 4,000 (91) (77) (163) (72) (400) (84) (380) (136) 2,000 (391) (394) (284) (800) 0 Creta Ertiga Sumo Bolero Duster Others Innova Jul-14 Jul-15 Scorpio Xuv500 Terrano S-Cross Oct-14 Oct-15 Apr-14 Apr-15 TUV300 Jun-14 Jan-15 Jun-15 Jan-16 KUV100 Fortuner Mar-15 Feb-15 Feb-16 Nov-14 Dec-14 Nov-15 Dec-15 Aug-14 Sep-14 Aug-15 Sep-15 Ecosport May-15 May-14 Fig 9 - Sales trend in UV (urban) segment S-Cross Creta (units) Xuv500 Duster 10,000 Ford Ecosport TUV300 KUV100 8,000 6,000 4,000 2,000 0 Oct-14 Oct-15 Apr-14 Apr-15 Jun-14 Jun-15 Feb-15 Feb-16 Dec-15 Dec-14 Aug-14 Aug-15 Hyundai’s Creta sold the highest UVs in a month at 8.2k units (highest monthly sales as capacity ramps up), higher than Mahindra Bolero’s 7.5k units.