May 2013

Dashboard
The Monthly Auto Update

Data Track: April 2013 volume update of auto majors

Speedometer
April 2013 relative performance

Sector overview and outlook ........................................................... 2 Hero MotoCorp .................................................................................3 Bajaj Auto .......................................................................................... 4 Maruti Suzuki .................................................................................... 6 Mahindra & Mahindra .......................................................................8 Tata Motors ...................................................................................... 10 Ashok Leyland ................................................................................. 12 Eicher Motors .................................................................................. 13 TVS Motor ........................................................................................ 14

Special Report

MARUTI SUZUKI: Internal target to grow volumes by 10-12% ....... 16 HMSI launches its cheapest motorcycle Dream Neo ..................... 19 Two-wheelers ................................................................................. 21 Three-wheelers .............................................................................. 23 Cars and UVs .................................................................................... 25 Commercial vehicles....................................................................... 27

12-month relative performance

Sector Gauge: March update

News and Events ............................................................................... 30

Honda launches Amaze, to roll out UVs over two-three years Royal Enfield starts new plant, targets to sell 175,000 units in CY13

Aggregate Volumes For April 2013*

Segment Apr-13 Apr-12 YoY (%) Mar-13 MoM (%) FY13 FY12 Chg (%) 2-Wheelers 973,230 1,074,439 -9.4 909,966 7.0 1,007,966 1,098,338 -8.2 Motorcycl e 880,577 970,854 9.3 809,267 8.8 915,313 994,753 8.0 3 Whe el e rs 52,100 46,829 11.3 39,018 33.5 52,100 46,829 11.3 Cars 102,252 115,405 11.4 124,106 17.6 102,252 115,405 11.4 UVs 43,812 43,265 1.3 54,609 19.8 43,812 43,265 1.3 Commercial Vehicles 51,198 50,787 0.8 79,989 -36.0 63,586 64,982 -2.1 LCV 31,628 29,768 6.2 49,916 36.6 31,628 29,768 6.2 M&HCV 19,570 21,019 6.9 30,073 34.9 31,958 35,214 9.2 Tractors 23,202 16,797 38.1 17,330 33.9 23,202 16,797 38.1 Total Volumes 1,245,794 1,347,522 -7.5 1,225,018 1.7 1,292,918 1,385,616 -6.7 * Aggre ga te of Baja j, He ro, TVS Motor, Ma ruti , M&M, Tata Motors , As hok Leyl a nd & Ei cher Motors S ource: Compa ny, MOSL

Comparative Valuation
P/E (x) CMP * Rating (INR) FY13E FY14E FY15E Ba jaj Auto 1,860 Buy 18.0 15.1 13.0 Hero MotoCorp 1,613 Buy 15.2 14.3 10.5 M&M 955 Buy 15.3 12.2 9.8 Maruti Suzuki 1,680 Buy 21.0 14.6 12.1 Tata Motors 296 Buy 10.8 8.6 7.4 As hok Leyl and 23 Buy 22.0 13.4 9.3 Ei che r Motors # 3,046 Buy 25.3 26.6 18.7 * Pri ce a s on 2nd Ma y 2013. # Nos . are on CY bas i s EV/EBITDA (x) FY13E FY14E FY15E 12.5 9.9 8.2 9.3 8.2 6.8 9.5 7.7 6.1 10.5 7.2 5.6 4.7 4.2 3.7 10.2 7.7 6.6 20.7 18.5 11.3 RoE (%) RoCE (%) FY13E FY14E FY15E FY13E FY14E FY15E 44.7 44.0 41.8 61.8 61.5 57.0 45.6 41.9 48.0 43.6 50.8 60.6 22.0 20.5 20.1 24.2 24.5 24.1 12.9 15.9 16.5 15.5 19.5 20.3 21.8 22.3 21.2 22.1 23.1 23.5 6.6 10.5 14.6 8.0 10.3 12.6 20.3 17.1 21.4 22.9 17.5 23.7 Source: Compa ny, MOSL

Jinesh Gandhi (Jinesh@MotilalOswal.com); +91 22 3982 5416 Chirag Jain (Chirag.Jain@MotilalOswal.com); + 91 22 3982 5418
Investors are advised to refer through disclosures made at the end of the Research Report.

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Data Track

Sector overview and outlook

Inventory correction restrict 2W dispatches; PV demand bottoming-out
While retail sales have improved due to festivals in April this year against March last year, the underlying demand trends remain weak: Two-wheelers: Retail demand has been strong in Apr-13 considering the festivals in this month (v/s March last year). Our channel interaction indicates retail demand to have grown at a healthy rate YoY, though inventory correction restricted dispatches. Passenger vehicles: PV demand seems to be bottoming-out. Petrol segment is showing signs of recovery, though correspondingly diesel segment is moderating. MHCVs: The segment continues to witness pressure reflecting tough macroeconomic conditions. This coupled with higher competitive intensity has resulted in high level of discounting. Tractors: Strong growth in dispatches for M&M reflecting inventory correction undertaken in 4QFY13 and high retails due to festivals in April this year. Expected softening in interest rates, and reform-led revival in business and consumer sentiment are key medium-term drivers for auto volumes.

4QFY13 margins to improve QoQ on favorable currency, stable RM cost

EBITDA margins for our Auto universe is expected to improve 70bp QoQ (-110 YoY) on favorable currency (JPY/INR) together with stable RM cost. Discount levels remain high across segments particularly for CVs and PVs. In two-wheelers, there is no widespread cash discount, but OEMs are aggressively pushing finance schemes to spur demand.

Lower rates, price hikes, soft commodities cushion slowdown impact

Over the last few months, major auto financiers have cut lending rates. This augurs well for auto demand, particularly for PVs and CVs. Besides, on the back of further monetary easing, economic activity and consumer sentiment should improve. At the company level, price increases and softening commodity prices are positive to cushion the impact of slowdown on profitability.

Prefer Maruti Suzuki & Tata Motors, in mid-caps we like Eicher Motors
With a positive view on interest rates and stable commodity prices, we believe that 4-Ws & CVs could see revival of performance. We prefer Maruti Suzuki and Tata Motors. In mid-caps, we like Eicher Motors.
Key Financial Indicators Volume Chg (%) ^ EBITDA Margins (%) EPS (INR) * EPS Growth (%) * FY13 FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E Ba jaj Auto -2.6 8.6 14.4 18.3 19.5 19.3 103.4 123.5 142.7 -2.5 26.4 15.5 Hero MotoCorp -2.6 6.1 13.6 9.5 10.1 12.4 106.1 112.5 153.7 -10.9 6.1 36.6 M&M 24.2 10.0 10.6 13.5 14.0 14.1 62.6 78.6 97.7 22.2 25.6 24.2 Maruti Suzuki 3.3 6.8 14.0 9.7 12.2 12.4 80.2 114.8 138.9 37.8 43.2 21.0 Tata Motors * -12.3 8.7 14.0 13.3 13.9 14.0 27.4 34.3 40.2 -27.5 25.1 17.2 As hok Leyl and 11.9 17.5 16.2 8.5 10.1 10.1 1.0 1.7 2.5 -50.8 64.2 43.9 Ei che r Motors # 8.6 7.3 9.1 120.2 114.3 163.0 5.1 -4.9 42.6 ^ Vol ume growth for s ta ndal one ; * Cons ol i da te d where ve r a ppl i ca bl e , ** Royal ty a djus ted ma rgi ns , # Nos . a re on CY ba s i s .

May 2013

Dashboard

Data Track

Hero MotoCorp
Below est; sales decline by 9.5% YoY to 499,113 (est 525,000 units), healthy retails but inventory correction restrict dispatches

Snapshot of volumes for April 2013

Apr-13 Total volume 499,113 Apr-12 551,557 YoY (%) -9.5 Mar-13 468,283 MoM (%) FY14-YTD 6.6 499,113 Chg (%) -9.5 FY14 estimate 6,447,055 YoY (%) 6.1

Highlights
Hero have planned new launches, new campaigns, capacity addition and network expansion to boost the sentiment of the domestic industry and accelerate growth.

Hero Moto's April-13 wholesale dispatches stood at 499,113 units, a decline of 9.5% YoY (+6.6% MoM). Considering the major festivals such in April this year (v/s March last year), Hero Moto has retailed over 550,000 units. However, high channel inventory (as on Mar-end) have restricted wholesale dispatches despite healthy retails. Retails will be strong in May as well due to marriage season demand in key states of UP, Bihar, MP & Rajasthan. On release of April sales, Mr. Anil Dua, Senior Vice-President (Marketing & Sales), Hero MotoCorp Ltd said, "we are glad to have opened the new financial year with despatch of close to five lakh two-wheelers in April. However, even this despatch number does not reflect the actual retail momentum during the month. Indeed, we have retailed over 550,000 units in April, which is an early indication of demand picking up for us across markets. Going forward for the overall industry growth, a lot will also depend on the monsoon and overall economic activity," he added. HMSI on the other hand has achieved its highest ever sales of 259,560 units in Apr13, a growth of 31% YoY (+2.7% MoM). While motorcycle sales grew by 51.4% YoY (+2.1% MoM) to 123,240 units, scooter sales increased by 16% YoY (+3.2% MoM) to 117,404 units. Hero Moto trades at 14.3x/10.5x FY14E/FY15E EPS respectively. Maintain Buy.

Hero MotoCorp: two-wheelers

FY11 FY12 FY13 FY14

625,000 560,000 495,000 430,000 365,000 300,000 Apr May Jun Jul Aug Sep Oct Nov De c Jan Fe b Ma r

Hero MotoCorp: Financial & Valuation Summary Bloomberg HMCL IN Year Net Sales PAT EPS EPS P/E Equity Shares (m) 200 End (INR m) (INR m) (INR) Gr. (%) (X) CMP (INR) 1,613 3/12A 233,681 23,781 119.1 18.4 13.5 52-Wk Range (INR) 2,279/1,434 3/13E 235,827 21,182 106.1 -10.9 15.2 1,6,12 Rel. Perf. (%) 7/-12/-26 3/14E 256,134 22,475 112.5 6.1 14.3 3/15E 296,251 30,702 153.7 36.6 10.5 M.Cap. (USD b) 6.0
May 2013

P/CE (X) 12.2 13.4 12.6 8.8

P/BV (X) 7.5 6.4 5.6 4.6

EV/ EBITDA 8.8 9.3 8.2 6.8

RoE (%) 65.6 45.6 41.9 48.0

RoCE (%) 49.9 43.6 50.8 60.6

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Data Track

Bajaj Auto
Apr-13 volumes - Below est at 344,178 (-10% YoY, +14.3% MoM, v/s est 365,000); disappointment largely on motorcycle exports

Snapshot of volumes for April 2013

Apr-13 Total volume Motorcycl es Three -Whee l ers Domes ti c Exports 344,178 300,827 43,351 213,849 130,329 Apr-12 381,590 342,324 39,266 212,580 169,010 YoY (%) -9.8 -12.1 10.4 0.6 -22.9 Mar-13 301,231 267,037 34,194 199,857 101,374 MoM (%) 14.3 12.7 26.8 7.0 28.6 FY14 344,178 300,827 43,351 213,849 130,329 Chg (%) -9.8 -12.1 10.4 0.6 -22.9 FY14 estimate 4,633,856 4,105,652 528,204 2,840,534 1,793,323 YoY (%) 8.6 8.5 9.6 5.2 14.5

Highlights
Bajaj expects May-13 to be a relatively better month, however June would again see some softness.

Bajaj Auto's Apr-13 total volumes declined by 10% (+14.3% MoM) to 344,178 (v/s est of 365,000). Sequential jump in volumes is partially due to bookings of 20k units of March exports in April. Domestic volume were flat at 213,849 (+7% MoM), whereas exports declined by 22.9% YoY (+28.6% MoM) to 130,329 units. Overall motorcycle volumes declined 12.1% YoY (+12.7% MoM) to 300,827 (v/s est 320,000). Domestic motorcycle volumes were flat YoY at ~200,000 units. Bajaj expects May-13 to be a relatively better month, however June would again see some softness. Three-wheeler sales for Apr-13 grew 10.4% YoY (+26.8% MoM) to 43,351 (v/s est 45,000). For Bajaj, we factor in volume growth of 8.6% in motorcycles in FY14 (+5.2% domestic, +14.5% exports) and ~9.6% in 3Ws (+7% domestic, +12% in exports). The stock trades at 15.5x/13.0x FY14E/FY15E EPS of INR123.5/142.7 respectively. Maintain Buy.

Bajaj Auto: Financial & Valuation Summary

Bl oombe rg BJAUT IN Equi ty Shares (m) 289.4 CMP (INR) 1,860 52-Wk Range (INR) 2,229/1,423 1,6,12 Re l .Perf.(%) 5/4/16 M.Cap. (USD b) 10.0

Year End 3/12A 3/13E 3/14E 3/15E

Net Sales (INR m) 195,290 201,152 228,563 263,955

PAT (INR m) 31,069 29,923 35,743 41,280

EPS (INR) 107.4 103.4 123.5 142.7

EPS Gr. (%) 18.8 -3.7 19.5 15.5

P/E (X) 17.3 18.0 15.1 13.0

P/CE (X) 16.5 17.1 14.4 12.5

P/BV (X) 8.9 7.3 6.0 5.0

EV/ EBITDA 12.7 12.5 9.9 8.2

RoE (%) 56.7 44.7 44.0 41.8

RoCE (%) 73.0 61.8 61.5 57.0

May 2013

Dashboard

Two-wheeler volumes (units)

FY11 FY12 FY13 FY14

440,000

Discover and Pulsar contribute ~70% to two-wheeler volumes

375,000 310,000 245,000 180,000 Ap r Ma y Jun Ju l Aug Sep Oct Nov Dec Jan Feb Mar

Three-wheeler volumes (units)

FY11 FY12 FY13 FY14

52,000 45,000

Three-wheeler sales sales bounces back

38,000 31,000 24,000 Apr Ma y Jun Jul Aug Sep Oct Nov Dec Ja n Fe b Mar

200,000 160,000 120,000 80,000 40,000 Ap r May Ju n Jul

FY11

FY12

FY13

FY14

Exports under pressure during the month

Aug

Sep

Oct

No v

De c

Ja n

Fe b

Ma r

Market mix
Domestic Exports

100% 75%

Share of domestic sales have increased in Apr-13

50% 25% 0% Apr10 May10 Jun10 Jul10 Aug 10 Sep10 Oct10 Nov10 Dec10 Jan11 Feb11 Mar11 Apr11 May11 Jun11 Jul11 Aug 11 Sep11 Oct11 Nov11 Dec11 Jan12 Feb12 Mar12 Apr12 May12 Jun12 Jul12 Aug 12 Sep12 Oct12 Nov12 Dec12 Jan13 Feb13 Mar13 Apr13
Source: Company, MOSL

May 2013

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Data Track

Maruti Suzuki
Apr-13 volumes marginally below est at 97,302 units; Domestic sales in-line, blip in exports temporary phenomena

Snapshot of volumes for April 2013

Apr-13 Total volume Domes ti c A1 C A2 A3 A4 UV Export 97,302 90,523 1,500 8,696 54,962 20,047 0 5,318 6,779 Apr-12 100,415 90,255 1,705 11,723 55,087 16,144 3 5,593 10,160 YoY (%) -3.1 0.3 -12.0 -25.8 -0.2 24.2 NA -4.9 -33.3 Mar-13 119,937 107,890 2,050 9,506 68,865 20,981 0 6,488 12,047 MoM (%) FY14-YTD -18.9 -16.1 -26.8 -8.5 -20.2 -4.5 NA -18.0 -43.7 97,302 90,523 1,500 8,696 54,962 20,047 0 5,318 6,779 Chg (%) -3.1 0.3 -12.0 -25.8 -0.2 24.2 NA NA -33.3 FY14 estimate 1,251,077 1,116,534 YoY (%) 6.8 6.2

134,542

11.8

Highlights
Maruti Suzuki has been gaining market share over the last few months led by steady deliveries of diesel models (due to bookings) and recovery in petrol segment.

Maruti's Apr-13 volumes de-grew by 3.1% YoY (-18.9% MoM) to 97,302 (v/s est 99,000 units). While domestic volumes were flat YoY at 90,523 (v/s est 88,000), exports declined by 33% YoY (-44% MoM) to 6,779 units. Management highlighted drop in export volumes as a temporary phenomena and expects to recover next month onwards. Dzire continues to perform strongly with 25% YoY growth to 19,446 units. MSIL has guided for 5-6% industry growth for FY14. Our industry interaction indicates that the company is internally targeting 10-12% growth in FY14 volumes. Hyundai's domestic sales have declined by 7.6% YoY (-4.3% MoM). However, exports have grown by 26% YoY (+8.7% MoM) to 24,551 units. On release of April sales, Hyundai's Rakesh Srivastava (SVP - Sales & Marketing) said "The exports have shown good growth on account of strong demand from non-European markets, while the domestic market continues to witness pressure...There are signs of recovery with the increase in demand for petrol cars". Maruti Suzuki trades at 14.6x/12.1x FY14E/15E consolidated EPS and 8.9x/7.6x CEPS. Maintain Buy.

Bloomberg MSIL IN Equity Sha res (m) 302.1 CMP (INR) 1,680 52-Wk Ra nge (INR 1,690/1,052 1,6,12 Rel.Perf.(%) 30/16/22 M.Cap. (USD b) 9.4
May 2013

Maruti Suzuki: Financial & Valuation Summary

Year End 3/12A 3/13E 3/14E 3/15E Total Inc. (INR m) 355,871 435,879 481,250 556,685 PAT Con. EPS EPS Con. P/E (INR m) (INR) Gr. (%) (x) 16,351 58.2 -29.4 23,921 80.2 37.8 21.0 34,284 114.8 43.2 14.6 41,971 138.9 21.0 12.1 P/CE (x) 11.8 8.9 7.6 P/BV (X) 2.7 2.3 2.0 EV/ EBITDA 10.5 7.2 5.6 RoE (%) 10.8 12.9 15.9 16.5 RoCE (%) 13.2 15.5 19.5 20.3

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Monthly volumes (units)

FY11 FY12 FY13 FY14

140,000 115,000 90,000 65,000 40,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Export volumes (units)

FY11 FY1 2 FY1 3 FY1 4

20,000 15,000 10,000 5,000 0 Apr Ma y Jun Jul Aug Sep Oct No v Dec Jan Feb Ma r

Exports declined by 33.3% in Apr-13

Segment mix (domestic)

A1 A2 A3 + A4 MPVs + UVs

100% 75%

A2 & A3 segments dominate the segment mix; UVs contribution rising

50% 25% 0% Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13

Market mix
Dome stic Sal es Exports

100% 75%

Share of exports have declined in FY13

50% 25% 0% Apr-10 May-10 Jun-10 Jul-10 Aug-10 S ep-10 Oct-10 Nov-10 Dec-10 Jan-11 F eb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 S ep-11 Oct-11 Nov-11 Dec-11 Jan-12 F eb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 S ep-12 Oct-12 Nov-12 Dec-12 Jan-13 F eb-13 Mar-13 Apr-13

Sour ce: Compan y, MOSL May 2013 7

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Data Track

Mahindra & Mahindra

Apr-13 volumes: Above est; Tractor volume surprises with 38% YoY growth, growth in Auto disappoints with marginal growth of 2% YoY

Snapshot of volumes for April 2013

Apr-13 Total volume UV (i ncl . pi ck-ups ) LCV (MNAL) Ve ri to Thre e-Whe el e rs Tractors 64,634 35,742 704 950 4,036 23,202 Apr-12 57,516 33,531 1,028 1,501 4,659 16,797 YoY (%) 12.4 6.6 -31.5 -36.7 -13.4 38.1 Mar-13 69,234 44,527 1,335 1,211 4,831 17,330 MoM (%) FY14-YTD -6.6 -19.7 -47.3 -21.6 -16.5 33.9 64,634 35,742 704 950 4,036 23,202 Chg (%) 12.4 6.6 -31.5 -36.7 -13.4 38.1 FY14 estimate 868,346 527,426 13,001 18,011 70,650 239,259 YoY (%) 10.6 12.5 10.0 15.0 8.0 7.0

Highlights
"We are happy with the 38% growth which we have achieved during April 2013. We feel that this is on the back of improved market sentiments. In addition the expectation of a normal monsoon is clearly being seen as a positive indicator" said Rajesh Jejurikar, Chief Executive, Farm Equipment Sector, on release of tractor sales. M&M's Apr-13 Tractor volumes grew by 38% YoY (+33.9% MoM) to 23,202 units (v/s 17,250 units). The company mentioned such high growth is due to improved market sentiments (led by festivals in this month). Our channel interaction indicates inventory build-up as well, apart from healthy retails, post the inventory correction undertaken in 4QFY13. For FY14, we forecast a growth of 7% for M&M's tractor volumes. Auto volumes grew marginally by 2% YoY (-20% MoM) to 41,432 units (v/s est ~45,338 units). UVs & Pick-ups segment grew by 6.6% YoY (-19.7% MoM) to 35,742 units, against our expectation of 38,225 units. Growth in passenger UVs stood only at 1% YoY, while SCVs (pick-ups) grew by 10% YoY to 14,414 units. Our industry interaction indicates pressure across product segments except Bolero. Sales for XUV5OO is estimated at 2,500 units (v/s FY13 avg of 3,800 units), while Xylo/Quanto at 1,500 units. 3-wheeler volumes declined by 13.4% YoY (-16.5% MoM) to 4,036 (v/s est 5,032) units. Pravin Shah, Chief Executive, Automotive Division, Mahindra & Mahindra Ltd. said on release of monthly Auto division sales, "We are extremely disappointed that the additional 3% excise duty on SUVs has not been reversed in the Finance Bill. We remain cautiously optimistic of the current situation and do hope that with the much awaited and needed reduction in interest rates announcement by the RBI next week, the auto industry will look up. At Mahindra, we hope to create excitement with the launch of the Verito Vibe and other product variants". The stock trades at 12.2x/9.8x consol. FY14E/FY15E EPS of INR 78.6/97.7 respectively. Maintain Buy.

Mahindra and Mahindra: Financial & Valuation Summary

Bl oomberg Equi ty Sha res (m) CMP (INR) 52-Wk Ra nge (INR) 1,6,12 Rel .Perf.(%) M.Cap. (USD b) MM IN 587.2 955 975/622 -3/-1/14 10.6

Year Net Sales S/A PAT * S/A EPS * Cons. Con. EPS End (INR m) (INR m) (INR) EPS (INR) Gr (%) 3/12A 318,535 28,888 48.3 51.2 6.6 3/13E 404,238 34,797 58.1 62.6 22.2 3/14E 457,392 38,596 64.5 78.6 25.6 3/15E 518,648 44,592 74.5 97.7 24.2 * S/A i ncl udi ng MVML

P/E Cons. (x) P/E (x) 19.8 18.6 16.4 15.3 14.8 12.2 12.8 9.8

RoE (%) 23.0 22.0 20.5 20.1

RoCE EV/ EV/ (%) Sales (x) EBITDA 23.1 0.0 0.0 24.2 1.1 9.5 24.5 0.9 7.7 24.1 0.7 6.1

May 2013

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Utility vehicle volumes (units)

48,000 39,000 30,000 21,000 12,000 Apr Ma y Jun Jul Aug Sep Oct Nov Dec Jan Feb Ma r
FY11 FY12 FY13 FY14

Growth in UV volumes have moderated in Apr13

Tractor volume (units)

FY11 FY12 FY13 FY14

36,000

28,000

Tractor volumes grew by 38% YoY

20,000

12,000

4,000 Apr Ma y Jun Jul Aug Sep Oct Nov De c Jan Fe b Mar

Product mix
UVs Tractors LCVs, 3-wheelers Cars

100%

Tractors and UVs dominate the segment mix, but we expect the share of three wheelers and LCVs to increase

75% 50% 25% 0% Oct-10 Oct-11 Apr-10 Aug-10 Apr-11 Aug-11 Apr-12 Aug-12 Oct-12 Dec-10 Dec-11 Dec-12 Feb-11 Feb-12 Feb-13 Apr-13 Jun-10 Jun-11 Jun-12

Source: Company, MOSL

May 2013

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Data Track

Tata Motors
Apr-13 volumes: Below est, with 15% YoY decline to 51,160 units (est 54,500 units); Domestic M&HCV grew 2% YoY, although LCV growth moderates to 5%

Snapshot of volumes for April 2013

Apr-13 Total volume HCV's LCV's Cars UV's 51,160 10,402 28,688 9,318 2,752 Apr-12 60,086 10,338 26,522 19,085 4,141 YoY (%) -14.9 0.6 8.2 -51.2 -33.5 Mar-13 72,712 15,416 44,256 9,446 3,594 MoM (%) FY14-YTD -29.6 -32.5 -35.2 -1.4 -23.4 51,160 10,402 28,688 9,318 2,752 Chg (%) -14.9 0.6 8.2 -51.2 -33.5 FY14 estimate 809,503 158,363 478,902 191,702 51,129 YoY (%) -10.7 5.0 12.0 5.1 5.1

Highlights
Tata Motors have implemented a price hike of 1-1.5% effective April in CVs

Total Apr-13 volumes declined by 14.9% YoY (-29.6% MoM) to 51,160 units (v/s est 54,500). Domestic M&HCV volumes grew 2% YoY (-33% MoM) to 10,002 units (v/s est 8,500 units). Our channel check indicates that Tata Motors & Ashok Leyland have implemented a price hike of 1-1.5% effective Apr-13. We estimate volume growth (incl exports) of 5% in FY14. Domestic LCVs volume growth moderated to 5% YoY (-38% MoM) to 26,023 units (v/s est 29,000). Growth in LCVs have been impacted with delayed impact of weak economic growth. We estimate volume growth (incl exports) of 12% in FY14. Passenger cars de-grew by 52% YoY (flat MoM) to 8,918 (v/s est 10,000) as it continues to struggle due to weak brand perception and higher competitive intensity. Under new management team, the company is making efforts to improve its positioning in passenger car business. We estimate volume growth (incl exports) of 5% in FY14. UV volumes declined by 34% YoY (-23% MoM) at 2,652 units (v/s est 2,935). We estimate volume growth (incl exports) of 5% in FY14. The stock trades at 8.6x FY14E consolidated EPS and 7.4x FY15E consolidated EPS. Maintain Buy.

Blo omb erg Actual Eq. Sh (m) CMP (INR) 52-Wk Ran ge (INR) 1,6,12 Rel . Perf. (%) M.Cap . (USD b)

TTMT IN 3,173.8 296 321/138 11/8/-5 18.3

Tata Motors: Financial & Valuation Summary Year Sales Adj. PAT Adj. EPS Norm. P/E Norm. RoE RoCE EV/ EV/ End * (INR m) (INR m) (INR) EPS (INR) ^ Ratio P/E (x) (%) (%) Sales (x) EBITDA (x) 3/12A 1,656,545 125,568 37.8 22.2 7.8 13.3 38.4 24.1 0.7 4.8 3/13A 1,876,751 91,090 27.4 7.5 10.8 39.4 21.8 22.1 0.6 4.6 3/14A 2,112,230 113,946 34.3 12.9 8.6 22.9 3/15A 2,379,543 133,555 40.2 16.3 7.4 18.2 * Cons ol i date d; ^ Norma l i ze d for capi tal i zed e xpens es 22.3 23.1 21.2 23.5 0.6 0.5 4.2 3.7

May 2013

10

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M&HCV volumes (units)

FY1 1 FY12 FY13 FY14

28,000

M&HCV volumes continue to remain under pressure

22,000 16,000 10,000 4,000 Ap r May Jun Jul Au g Se p Oct Nov Dec Jan Feb Ma r

LCV volumes (units)

FY11 FY12 FY13 FY14

48,000 40,000

LCV growth has also moderated

32,000 24,000 16,000 8,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Ma r

Car volumes (units)

35,000 29,000
FY11 FY1 2 FY1 3 FY14

Domestic car volumes de-grew 51.2% YoY

23,000 17,000 11,000 5,000 Ap r May Jun Jul Aug S ep Oct Nov Dec Jan F eb Mar

Product mix in the CV segment

M&HCVs LCVs

100% 75%

LCVs account for over 70% of the CV product portfolio

50% 25% 0% Apr-10 May-10 Jun-10 Jul -10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul -11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul -12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13

Sour ce: Company, MOSL May 2013 11

Dashboard

Data Track

Ashok Leyland
Below est; MHCVs decline by 18.8% YoY to 5,251 (v/s 5,821), Dost volume grows only by 1%

Snapshot of volumes for April 2013

Apr13 Total volume CV (e x DOST SCV) DOST 7,487 5,251 2,236 Apr12 8,686 6,468 2,218 YoY (%) 13.8 -18.8 0.8 Mar 13 14,020 9,695 4,325 MoM (%) FY14 YTD 46.6 -45.8 -48.3 7,487 5,251 2,236 Chg (%) 13.8 -18.8 0.8 FY14 estimate 134,547 84,547 50,000 YoY (%) 17.5 6.0 44.1

Highlights
Ashok Leyland have implemented a price hike of 1-1.5% and discount reduction of 2025% MoM effective Apr13, as per our industry interactions

Ashok Leyland Apr-13 volumes declined by 13.8% YoY (-46.6% MoM) to 7,487 (v/s est 8,686 units). MHCVs registered a decline of 18.8% YoY (-45.8% MoM) to 5,251 units (v/s est 5,821 units) as weak economic growth impact freight availability and transporters profitability. We estimate 6% growth in FY14 MHCV volumes. Dost (LCV) sales at 2,236 units (v/s est 3,250 units), a growth of 1% YoY. We estimate DOST volumes of 50,000 units in FY14. With expected improvement in macro-economic environment, we expect MHCV industry to recover in 2HFY14/FY15. AL, being pure play and second largest CV player in India, is the best bet to play expected improvement in CV cycle. The stock trades at 13.4x/9.3x FY14E/FY15E earnings of INR1.7/2.5 respectively. Maintain Buy.

Bl oombe rg Equi ty Shares (m) 52-Wee k Range 1,6,12 Re l . Pe rf. (%) M.Cap. (INR b) M.Cap. (USD b)

AL IN 2660.68 33/20 4/-3/-29 61 1.1

Ashok Leyland: Financial & Valuation Summary Year Net Sales PAT EPS EPS P/E End (INR m) (INR m) (INR) Gr. (%) (x) 3/11A 111,771 6,313 4.7 48.1 4.8 3/12A 128,420 5,660 2.1 -55.3 10.8 3/13E 123,590 4,155 1.0 -50.8 22.0 3/14E 141,214 4,564 1.7 64.2 13.4 3/15E 166,587 6,567 2.5 43.9 9.3

P/BV (x) 1.5 1.5 1.4 1.4 1.3

RoE (%) 16.5 13.8 6.6 10.5 14.6

RoCE (%) 14.8 12.5 8.0 10.3 12.6

EV/ EV/ Sales (x) EBITDA (x) 0.4 4.1 0.7 6.9 0.9 10.2 0.8 7.7 0.7 6.6

May 2013

12

Dashboard

Data Track

Eicher Motors
Above est, Buses continues to grow strongly with 41% YoY growth, decline in LMD restricted to 11% (v/s 15.6% CY13-YTD)

Snapshot of volumes for April 2013

Apr-13
Royal Enfie ld VECV 12,788 3,917 2,126 506 1,134 3,766

Apr-12
9,007 4,213 2,379

YoY (%) March1 MoM chg 3 (%) chg

42.0 -7.0 -10.6 12,139 4,962 2,820 5.3 -21.1 -24.6

CY13
47,524 16,305 9,765 2,615 3,322 15,702

CY13 Residual Residual YTD (%) CY13 YoY (%) YTD Growth Monthly chg estimate chg Monthly (%) Run rate Run rate
44.4 180,432 -11.4 44,497 -15.6 25,762 59.1 -7.8 -12.8 65.0 -5.6 -11.0 16,613 11,881 3,524 4,076 2,000 2,441

Domes ti c LMD Domes ti c HD Domes ti c Bus e s Total Domestic Exports

151

782 802 3,963 250

-35.3 41.4 -5.0 -39.6

876 -42.2 1,064 6.6 4,760 -20.9 202.0 -25.248

603

-14.9 16.8 -10.2 -34.6

7,268 9,524 42,554 1,944

-5.6 11.8 -7.0 -22.3

0.6 582 654 9.3 775 831 -5.0 3,356 3,926 -15.1 168 151 Source: Compa ny, MOSL

Highlights
Royal Enfield continues to enjoy average waiting period of over 8-10 months across products.

Eicher Motor's Apr-13 CV volumes declined 7% YoY (-11% MoM) to 3,917 units (v/s est 3,638 units). Sales volumes were higher across segments v/s our estimates. LMD segment declined by 10.6% YoY (-24.6% MoM) to 2,126 units. For CY13, we estimate Eicher's LMD segment to decline by 12.8%. HD volumes declined by 35.3% YoY (-42.2% MoM) to 506 units. For domestic HD segment, we estimate 5.6% decline in CY13 for Eicher Motors due to challenging macro-economic environment. Bus volumes have increased by 41.4% YoY (+6.6% MoM) to 1,134 units. For CY13, Eicher buses are expected to grow by 11.8%. CY13 would witness the benefit in volumes from the start of bus body plant (in 1QFY13), commencement of medium duty engine project (3QCY13) and launch of the new HD range in 4QCY13 (jointly developed by Eicher-Volvo). Royal Enfield sales have grown by 42% YoY to 12,788 units. The company is targeting sales of 175,000 units (v/s 113k units in CY12). Eicher Motors trades at 26.6x/18.7x/13.7x CY13E/CY14E/CY15E EPS of INR 114.3/ 163.0/222.5. Maintain Buy.

Bl oomberg EIM IN Equi ty Sha res (m) 27.0 52-Wk Ra nge (INR) 3,240/1,620 1,6,12 Rel . Pe rf. (%) 3/26/56 M.Cap. (INR b) 72.7 M.Cap. (USD b) 1.3

Eicher Motors: Financial & Valuation Summary EPS EPS Year Net Sales PAT End (INR b) (INR b) (INR) Gr (%) 12/12A 63.9 3.2 120.2 5.1 12/13E 71.7 3.1 114.3 -4.9 12/14E 95.3 4.4 163.0 42.6 12/15E 119.1 6.0 222.5 36.5

P/E (x) 25.3 26.6 18.7 13.7

P/BV (x) 4.8 4.3 3.7 3.1

RoE (%) 20.3 17.1 21.4 25.0

RoCE (%) 22.9 17.5 23.7 28.6

EV/EBITDA Div. Yld (x) (%) 20.7 0.6 18.5 0.6 11.3 0.9 7.8 1.2

May 2013

13

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Data Track

TVS Motor
Higher competitive pressures impact scooters, motorcycles sales were flat
Snapshot of volumes for April 2013
Apr 13 Total volume Motorcycl es Scooters Mopeds 165,215 67,849 29,692 62,961 Apr 12 174,455 67,966 35,833 67,752 YoY Mar13 (%) 5.3 0.2 17.1 7.1 167,583 61,808 29,261 71,438 MoM FY14YTD (%) 1.4 9.8 1.5 11.9 FY13YTD Chg (%)

165,215 174,455 5.3 67,849 67,966 0.2 29,692 35,833 17.1 62,961 67,752 7.1 Source: Compa ny, MOSL

Highlights
TVS Motor plans to launch a new scooter and motorcycle in FY14

TVS Motor reported sales of 165,215 units, a decline of 5.3% YoY and 1.4% MoM. While recent launch of Phoenix motorcycle (125cc) helped TVS to sustain motorcycle volumes at 67,489, higher competitive pressures have impacted its scooter sales (flat YoY, +9.8% MoM). Sales of mopeds have declined 7.1% YoY (-11.9% MoM) to 62,961 units. High margin three wheeler sales have increased by 62.3% YoY (-7.2% MoM) to 4,713 units. The company plans to launch a new scooter in 1HFY14 and a new motorcycle in 2HFY14. It also plans upgrades across the product portfolio and will introduce a diesel three-wheeler. The stock trades at 7.2x/6.3x FY14E/FY15E Bloomberg Consensus S/A EPS respectively, while at 11.4x/8.3x Consolidated EPS. Not Rated.

Motorcyle volumes (units)

FY11 FY12 FY13 FY14

98,000

Motorcycle volumes were flat YoY

86,000 74,000 62,000 50,000 Apr Ma y Jun Jul Aug Se p Oct Nov De c Ja n Fe b Mar

Source: Company, MOSL

May 2013

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Scooters and mopeds (units)

FY11 FY12 FY13 FY1 4

132,000 114,000 96,000 78,000 60,000 Apr Ma y Jun Jul Au g Sep Oct Nov De c Jan Feb Mar

Scooter volume declines by 17% YoY

Sales mix
Motorcycles Scooters & Mopeds

100%

Mopeds have been relatively stable

75% 50% 25% 0% Aug-10 Aug-11 Aug-12 Apr-10 Apr-11 Apr-12 Dec-10 Dec-11 Dec-12 Feb-11 Feb-12 Feb-13 Apr-13 Oct-10 Oct-11 Jun-10 Jun-11 Jun-12 Oct-12

Sour ce: Company, MOSL

May 2013

15

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Special Report

MARUTI SUZUKI: Internal target to grow volumes by 1012% in FY14, against 5-6% industry growth
Recovery in petrol segment to drive market share gains
We interacted with industry participants in the passenger vehicle space to get an update on Maruti Suzuki's (MSIL) retail demand trends, discounts, inventory levels etc. Key takeaways: MSIL has been gaining market share as: 1) Customers shift towards established brands during uncertain times, 2) Strength of its experienced network and wide product portfolio, 3) Higher market share in the petrol segment (now recovering), 4) CNG offerings in key markets (gaining traction over last few months), and 5) Higher exposure to relatively strong rural market (15% growth in FY13, 28% of sales volumes). Our industry interaction indicates that while MSIL is internally expecting industry growth of 5-6%, it is targeting 10-12% growth for itself in FY14 volumes. While waiting period for popular models of Swift & Dzire have reduced on higher supplies, our channel checks indicate there are no cash discounts on Swift/Dzire. Contrary to street expectations, Dzire still commands an average waiting of 1 month, though in metros/urban markets it is available off the shelf due to higher competitive pressures. While Honda has garnered healthy bookings for its recent launch of compact sedan Amaze, our channel checks (even with Honda dealers) indicate that there are concerns on its interiors, NVH (on diesel variant), lower pick-up compared to Dzire. While Amaze could perform reasonably well due to its pricing, looks and Honda badge, it may not significantly impact Dzire volumes. While MSIL has not implemented a price hike in Apr-13, there has been seasonal reduction in discounts in Apr-13 by 20-25% compared to Mar-13 levels.

While industry volumes continue to remain under pressure, MSIL is estimated to report flat retail and wholesale dispatches for Apr-13.
The overall economic scenario and consequent consumer sentiments continues to remain challenging. However, our channel checks indicate that MSIL has been performing relatively better than the PV Industry. Over the last few months, MSIL has been consistently gaining market share. Our channel interaction indicates that petrol car segment is witnessing higher consumer interest with recent diesel de-regulation and continuous news flow on diesel price hike. Sustained increase in diesel prices could lead to meaningful shift towards petrol segment, as per dealers. This would be beneficial to MSIL given its high exposure towards petrol segment (entry level cars) and high discounts on petrol.

May 2013

16

Dashboard

MSIL's market share have been on a rising trend

MSIL has higher market share in petrol segment

MSIL internally targeting 10-12% growth in FY14 volumes, higher than industry volume growth expectation of 5-6%
While MSIL expects domestic industry volume growth of 5-6% in FY14, it is internally targeting higher than industry growth at 10-12% in FY14 volumes. MSIL has been gaining market share as 1) Customers shift towards established brands during uncertain times, 2) Strength of its experienced/extensive network and wide product portfolio, 3) Higher market share in the petrol segment (now recovering), 4) CNG offerings in key markets of Delhi/Mumbai (gaining traction over last few months), and 5) Higher exposure to relatively strong rural market (15% growth in FY13, 28% of sales volumes).

Waiting period for popular diesel models have reduced on higher supplies; Contrary to street expectations, Dzire still commands an average waiting of 1 month

Strong response to new model launches (Swift, Dzire, Ertiga), shift of preference towards diesel variants (due to differential fuel pricing) and lock-out at Manesar led to huge order backlog for diesel variants of popular models for MSIL. Post the normalization of Manesar operations, MSIL has been focusing on increasing the supply of diesel variants of such popular models. This has led to reduction in waiting period for diesel variants of Swift/Dzire and almost NIL for Ertiga, while petrol variants of Swift/Dzire had come under waiting list for few months. Our channel interaction indicates that waiting period for Swift/Dzire have reduced over the last few months on higher supplies. However, Dzire continues to command a waiting period of average 1 month, though in metros/urban markets it is available off the shelf on higher supplies (due to relatively higher competitive pressures). Despite declining waiting period, our channel checks indicate there are no cash discounts on Swift/Dzire.

May 2013

17

Dashboard

Honda Amaze unlikely to impact Dzire volumes meaningfully

While Honda has garnered healthy bookings for its recent launch of compact sedan Amaze, our channel checks (even with Honda dealers) indicate that there are concerns on its interiors, NVH (on diesel variant), lower pick-up compared to Dzire. While Amaze could perform reasonably well due to its pricing, looks and Honda badge, it may not significantly impact Dzire volumes. While based on a product-to-product comparison, Dzire is the key competitor to Amaze, on a brand-to-brand comparison, we expect other players (particularly Toyota Etios) to be relatively more impacted.

Amaze's dashboard lacks appeal

Honda Amaze targets 50,000 units in FY14

Diesel (entry level variant) Honda Amaze Maruti Dzire Toyota Etios Chevrolet Sail M&M Verito Tata Manza Hyundai i20 * Ex-showroom Price * Engine (Ltr) 1.5 1.3 1.4 1.3 1.4 1.3 1.4 Power/ Weight (BHP/Ton) 93 70 67 69 57 74 73 Boot 3m avg. Space volumes (Ltrs) 400 316 18,485 460 3,480 370 1,598 510 1,249 460 2,247 295 7,749

599,500 670,743 629,000 630,577 599,975 5,99,899 Delhi

Discounts in Apr-13 have been lowered by 20-25% compared to Mar-13 levels.

While MSIL has not implemented a price hike in Apr-13, there has been seasonal reduction in discounts in Apr-13 compared to Mar-13 levels. Our channel interaction indicates that discounts have been reduced by 20-25% across models MoM. On an average, discounts have been reduced by INR5,000/unit on key models.

Indicative discount trend on key models (INR '000/unit)

Source: Pune based dealer

May 2013

18

Dashboard

Special Report

INDIA AUTO (2W): HMSI launches its cheapest new 110cc motorcycle Dream Neo priced against Hero's Splendor
HMSI aims to grow by 43% in FY14 to 3.93m units

HMSI has further expanded its product portfolio with the launch of 110cc motorcycle under Dream series (Dream Neo) - its cheapest and most fuel efficient offering in India. Dream Neo is priced at INR 43,150 (ex-showroom Delhi), INR2k cheaper than Dream Yuga and similarly priced as Hero's Splendor (INR42,950, ex-showroom Delhi). Dream Neo has the same engine (and looks) as Dream Yuga with marginally higher mileage and lower power/torque than Dream Yuga. Dream Neo outputs a peak power of 8.36 PS at 7,500 rpm and a peak torque of 8.633 Nm at 5,500 rpm. These figures are slightly lower than the 8.5 Bhp-8.91 Nm of Dream Yuga. HMSI targets to grow by 150% in 100-110cc mass market segment in FY14. It is confident of achieving 43% growth in FY14 to 3.93m units. Talking about Honda's strategic direction, Mr. Keita Muramatsu - President & CEO, HMSI, said "DREAM NEO is Honda's next big leap towards creating deep inroads into the Indian commuter segment. Our newly opened Technical centre comprising of R&D, Engineering, Purchase & Quality team, overcame the challenge of improving Mileage and meeting the competitive price point. Backed by our new product launches & network expansion, Honda aims to grow over 150% in 100-110cc motorcycle segment YoY. Overall, we are confident of customer demand for Honda 2Wheelers and eye 43% growth with 39.3 lac unit sales in FY'14." Elaborating on Dream Neo, Mr. Y. S. Guleria, Vice President - Sales & Marketing, HMSI, said "Creating a new paradigm in mass mobility, DREAM NEO is Honda's Most Affordable and Most Fuel Efficient 2Wheeler ever in India. While DREAM NEO is loaded with attractive & best in class features like Top Mileage of 74 kmpl*, it is being delivered at a truly aggressive pricing to delight Indian customers. Finally DREAM NEO is a package which is hard to resist by 100110cc mass segment motorcycle customers".

Valuation & view: We expect two-wheeler volume recovery to be back-ended in FY14, with near term volumes expected to remain weak. This coupled with HMSI's continued expansion on capacity, dealer network and product portfolio would result in sustained pressure on the domestic players. While valuations for both Hero MotoCorp and Bajaj Auto are reasonable, demand recovery along with stability in competitive intensity would be key driver for stock performance.
Honda Dream Neo

May 2013

19

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HMSI India product offerings

May 2013

20

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Sector Gauge
Two-wheelers: Volume snapshot
Total Domestic 2W % of Total 2W Total Motorcycle % of Domestic 2W Scooters & Mopeds % of Domestic 2W Exports % of Total 2W Total 2W

Two-wheelers
Domestic volumes moderate
Mar-12 FY12 Chg (%) 13,397,282 14.1 87 10,061,435 11.6 75 3,335,847 22.4 25 1,978,786 29.2 13 15,376,068 15.9 Source: SIAM/MOSL

Mar-13 1,089,425 88 778,116 71 311,309 29 149,643 12 1,239,068

Mar-12 1,182,100 89 849,312 72 332,788 28 145,699 11 1,327,799

YoY (%) -7.8 -8.4 -6.5 2.7 -6.7

Feb-13 1,101,989 86 798,549 72 303,440 28 172,463 14 1,274,452

MoM (%) -1.1 -2.6 2.6 -13.2 -2.8

FY13 13,759,280 88 10,081,185 73 3,678,095 27 1,960,225 12 15,719,505

Chg (%) 2.7 0.2 10.3 -0.9 2.2

Two-wheelers: Domestic volume trend (units)

FY11 FY1 2 FY13

1,400,000

Domestic motorcycle sales have declined by 8.4% in Mar-13

1,200,000 1,000,000 800,000 600,000 May Oct Nov Apr Mar Aug Sep Jan Feb Jun Dec Jul

Domestic market share in 2-wheelers

Hero MotoCorp 100% Bajaj Auto HMSI Yamaha TVS Motor

Increasing competition in 2-wheeler segment, with HMSI consistently gaining market share

75% 50% 25% 0% Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13

May 2013

21

Dashboard

Motorcycles: domestic volume trend

FY11 FY12 FY13

1,000,000

Motorcycles volumes remains under pressure

800,000 600,000 400,000 May Oct Nov Apr Mar Aug Jun Sep Jan
TVS M otor

Motorcycles: domestic market share

Hero MotoCorp Bajaj Auto HMSI Yamaha

Hero MotoCrop continues to dominate motorcycle segment, although HMSI's increasing its market share

100% 75% 50% 25% 0% Apr10 May10 Jun10 Jul10 Aug10 Sep10 Oct10 Nov10 Dec10 Jan11 Feb11 Mar11 Apr11 May11 Jun11 Jul11 Aug11 Sep11 Oct11 Nov11 Dec11 Jan12 Feb12 Mar12 Apr12 May12 Jun12 Jul12 Aug12 Sep12 Oct12 Nov12 Dec12 Jan13 Feb13 Mar13

Two-wheelers: Product mix

Mot orcycle Scoot ers& Mopeds

100% 75%

Motorcycles dominate 2W segment, though share of scooters rising rapidly

50% 25% 0% Apr10 May10 Jun10 Jul 10 Aug 10 Sep10 Oct 10 Nov10 Dec10 Jan11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr12 May12 Jun12 Jul 12 Aug 12 Sep12 Oct12 Nov12 Dec12 Jan13 Feb13 Mar13

Two-wheelers: export volumes (units)

FY11 FY12 FY1 3

200,000

Export volumes also declines MoM

175,000 150,000 125,000 100,000 Apr Oct May Mar Nov Aug Dec Jun Sep Jan Feb Jul

Feb

Dec

Jul

May 2013

22

Dashboard

Sector Gauge
Three-wheelers: Volume snapshot Total Domestic 3W % of Tota l 3W Passenger % of Domes ti c eW Total Goods % of Domes ti c 3W <1T % of Goods Vehi cl e >1T % of Goods Vehi cl e Exports % of Tota l 3W Total 3W

Three-wheelers
Demand remains weak
Mar-13 43,529 66 34,672 80 8,857 20 8,576 97 281 3 22,346 34 65,875 Mar-12 42,281 67 32,998 78 9,283 22 7,175 77 2,108 23 20,787 33 63,068 YoY (%) 3.0 5.1 -4.6 19.5 -86.7 7.5 4.5 Feb-13 44,117 62 35,578 81 8,539 19 8,261 97 278 3 27,526 38 71,643 MoM (%) -1.3 -2.5 3.7 3.8 1.1 -18.8 -8.1 YTD FY13 538,291 64 441,118 82 97,173 18 94,278 97 2,895 3 303,088 36 841,379 Chg (%) 3.5 7.0 -9.9 4.9 -83.9 -15.4 -4.2 Mar-12 FY12 Chg (%) 519,923 -1.2 59 412,076 -3.1 79 107,847 7.1 21 89,855 13.5 83 17,992 -16.3 17 358,393 32.8 41 878,316 10.3 Source: SIAM/MOSL

Three-wheelers: volume trend (including exports)

FY11 92,000 80,000 FY12 FY13

3W volumes grows by 4.5% YoY in Mar-13

68,000 56,000 44,000 32,000 Apr May Jun Jul Aug Sep Oct Nov Dec Ja n Feb Mar

Three-wheelers: domestic segment mix

Passenger Goods

100% 75%

Passenger segment dominates threewheelers with over 80% contribution

50% 25% 0% Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13

May 2013

23

May 2013

Bajaj Auto continues to dominate passenger segment

... Piaggio continues to lead in the goods segment

100%

Three wheelers: goods segment market share

Three wheelers: passenger segment market share

25%

50%

75%

100%

0%

25%

50%

75%

0%

Baja j Auto Pi aggi o M&M Others

Ba ja j Auto Pi aggi o M&M TVS Others

Apr10 May10 Jun10 Jul10 Aug10 Sep10 Oct10 Nov10 Dec10 Jan11 Feb11 Mar11 Apr11 May11 Jun11 Jul11 Aug11 Sep11 Oct11 Nov11 Dec11 Jan12 Feb12 Mar12 Apr12 May12 Jun12 Jul12 Aug12 Sep12 Oct12 Nov12 Dec12 Jan13 Feb13 Mar13

Apr10 May10 Jun10 Jul10 Aug10 Sep10 Oct10 Nov10 Dec10 Jan11 Feb11 Mar11 Apr11 May11 Jun11 Jul11 Aug11 Sep11 Oct11 Nov11 Dec11 Jan12 Feb12 Mar12 Apr12 May12 Jun12 Jul12 Aug12 Sep12 Oct12 Nov12 Dec12 Jan13 Feb13 Mar13

Dashboard

24

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Sector Gauge

Cars and UVs

Passenger cars remain sluggish, while UVs continue to grow
Mar12 FY12 Chg (%) 2,616,591 4.6 84 2,017,442 2.3 77 1,511,628 1.8 75 451,948 21.4 22 53,866 11.7 3 365,136 15.5 14 234,013 9.6 9 508,396 14.4 16 3,124,987 6.1 Source : SIAM/MOSL

Passenger vehicles: Volume snapshot Mar13 Total Domestic PVs 254,609 % of Total PVs 83 Total Cars 179,103 % of Domes ti c PVs 70 A1 & A2 124,123 % of Ca rs 69 A3 52,836 % of Ca rs 30 A4 & above 2,144 % of Ca rs 1 UVs 53,068 % of Domes ti c PVs 21 MPVs 22,438 % of Domes ti c PVs 9 Exports 51,807 % of Total PVs 17 Total PVs 306,416

Mar12 292,121 85 229,869 79 169,762 74 55,856 24 4,251 2 40,188 14 22,064 8 50,262 15 342,383

YoY (%) 12.8 22.1 26.9 5.4 49.6 32.0 1.7 3.1 10.5

Feb13 224,771 83 157,423 70 115,730 74 40,526 26 1,167 1 47,236 21 20,112 9 46,927 17 271,698

MoM (%) 13.3 13.8 7.3 30.4 83.7 12.3 11.6 10.4 12.8

YTD FY13 2,422,433 81 1,634,652 67 1,132,624 69 450,530 28 51,498 3 550,483 23 237,298 10 554,686 19 2,977,119

Chg (%) 7.4 19.0 25.1 0.3 4.4 50.8 1.4 9.1 4.7

Cars: domestic volume (units)

FY11 FY12 FY13

240,000 200,000

Car volumes declines by 22% YoY in Mar-13

160,000 120,000 80,000 Apr Ma y Jun Jul Aug Se p Oct Nov De c Ja n Feb Ma r

UVs & MPVs: domestic volume (units)

FY11 FY12 FY13

88,000

Volumes improve led by Ertiga, Duster and Quanto

76,000 64,000 52,000 40,000 28,000 16,000 Apr Ma y Jun Jul Aug Se p Oct Nov De c Jan Feb Mar

May 2013

25

May 2013

Export volumes pick-up MoM

MSIL market share improves over the last few months

Maruti's market share improves, driven by Ertiga

A2 dominates the passenger vehicles segment

20,000 29,000 38,000 47,000 56,000 65,000

100%

100%

25%
25% 50% 75% 0%

50%

75%

0%

UVs: domestic market share

Cars: domestic market share

Passenger vehicles: segment mix

Passenger vehicles: export volume (units)

100%

25%
Apr May Jun
Maruti

50%

75%

0%
Jul
M&M

A1

A2

Aug
FY11

TataMotor

TataMotor

A3

Sep Oct

FY12

Hyundai

A4&above

Toyota

Nov

Dec

GM

MPV

FY13

Maruti

Jan

Honda

UV

GM

Feb

Apr10 May10 Jun10 Jul10 Aug10 Sep10 Oct10 Nov10 Dec10 Jan11 Feb11 Mar11 Apr11 May11 Jun11 Jul11 Aug11 Sep11 Oct11 Nov11 Dec11 Jan12 Feb12 Mar12 Apr12 May12 Jun12 Jul12 Aug12 Sep12 Oct12 Nov12 Dec12 Jan13 Feb13 Mar13
Mar

Apr10 May10 Jun10 Jul10 Aug10 Sep10 Oct10 Nov10 Dec10 Jan11 Feb11 Mar11 Apr11 May11 Jun11 Jul11 Aug11 Sep11 Oct11 Nov11 Dec11 Jan12 Feb12 Mar12 Apr12 May12 Jun12 Jul12 Aug12 Sep12 Oct12 Nov12 Dec12 Jan13 Feb13 Mar13
Apr10 May10 Jun10 Jul10 Aug10 Sep10 Oct10 Nov10 Dec10 Jan11 Feb11 Mar11 Apr11 May11 Jun11 Jul11 Aug11 Sep11 Oct11 Nov11 Dec11 Jan12 Feb12 Mar12 Apr12 May12 Jun12 Jul12 Aug12 Sep12 Oct12 Nov12 Dec12 Jan 13 Feb13 Mar13

Dashboard

26

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Sector Gauge

Commercial vehicles
M&HCV declines, growth in LCV also moderates
Ma r12 FY12 Chg (%) 797,257 16.6 90 347,364 7.5 44 299,085 8.7 86 48,279 0.6 14 449,893 24.7 56 401,793 27.2 50 48,100 7.4 6 90,080 21.8 10 887,337 17.1 Source: SIAM/MOSL

Commercial vehicles: Volume snapshot Mar-13 Total Domestic CVs 84,956 % of Total CVs 94 Total M&HCV 29,591 % of Domestic CVs 35 Goods 23,724 % of M&HCVs 80 Pa s s enger 5,867 % of M&HCVs 20 Total LCVs 55,365 % of Domestic CVs 65 Goods 50,121 % of LCVs 59 Pa s s enger 5,244 % of LCVs 6 Exports 5,848 % of Total CVs 6 Total CVs 90,804

Mar-12 90,343 92 40,004 44 33,664 84 6,340 16 50,339 56 44,573 49 5,766 6 8,160 8 98,503

YoY (%) 6.0 26.0 29.5 7.5 10.0 12.4 9.1 28.3 7.8

Feb-13 68,353 91 21,463 31 17,421 81 4,042 19 46,890 69 43,093 63 3,797 6 6,372 9 74,725

MoM (%) 24.3 37.9 36.2 45.2 18.1 16.3 38.1 8.2 21.5

YTD FY13 793,082 91 268,196 34 221,705 83 46,491 17 524,886 66 476,733 60 48,153 6 80,002 9 873,084

Chg (%) 0.5 22.8 25.9 3.7 16.7 18.7 0.1 11.2 1.6

M&HCVs: Domestic volume - goods (units)

FY11 FY12 FY13

40,000 32,000

M&HCV volumes remains under pressure

24,000 16,000 8,000 0 Apr Ma y Jun Jul Aug Sep Oct Nov Dec Ja n Feb Mar

M&HCVs: domestic volume - buses (units)

FY11 FY12 FY13

7,500 6,000 4,500 3,000 1,500 0 Apr Ma y Jun Jul Aug Sep Oct Nov Dec Jan Feb Ma r

May 2013

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Tata Motors continue to dominate M&HCV goods segment

LCVs continue robust growth

20,000
100% 25% 50% 75%
25%

30,000
0%
0%

40,000

50,000

60,000

100%

50%

75%

LCVs: domestic volumes (units)

M&HCVs: domestic market share, buses (%)

M&HCVs: domestic market share, goods (%)

Ap r
Ta taMotor

May
FY1 1
AshokLe yland

Jun
FY12
Eiche r

Ta ta M otor

Ju l
FY13

Aug

Sep

As hokLe yl a nd

Oct

Nov

Dec

Eic he r

Swara j

Jan

Fe b

Mar

Apr 10 May 10 Jun 10 Jul 10 Aug 10 S ep 10 Oct10 Nov10 Dec10 Jan 11 F eb 11 Mar11 Apr11 May11 Jun 11 Jul11 Aug 11 S ep 11 Oct11 Nov11 Dec11 Jan 12 F eb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12 Aug 12 S ep 12 Oct12 Nov12 Dec12 Jan 13 F eb 13 Mar13
Apr 10 May 10 Jun 10 Jul 10 Aug 10 S ep 10 Oct 10 Nov 10 Dec 10 Jan 11 F eb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 S ep 11 Oct 11 Nov 11 Dec 11 Jan 12 F eb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12 Aug 12 S ep 12 Oct 12 Nov 12 Dec 12 Jan 13 F eb 13 Mar 13

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May 2013

Tata Motors dominates the domestic LCV segment

LCVs contribution to CVs increased

100% 25%
25% 0%
LCVs < 12T <16T < 35T

50%

75%

100%

LCVs: domestic market share (%)

Goods: segment-wise break-up (%)

0% Apr10 May10 Jun10 Jul10 Aug10 Sep10 Oct10 Nov10 Dec10 Jan11 Feb11 Mar11 Apr11 May11 Jun11 Jul11 Aug11 Sep11 Oct11 Nov11 Dec11 Jan12 Feb12 Mar12 Apr12 May12 Jun12 Jul12 Aug12 Sep12 Oct12 Nov12 Dec12 Jan13 Feb13 Mar13
Apr10 May10 Jun10 Jul 10 Aug 10 Sep10 Oct10 Nov10 Dec10 Jan11 Feb11 Mar11 Apr11 May11 Jun11 Jul 11 Aug 11 Sep11 Oct11 Nov11 Dec11 Jan12 Feb12 Mar12 Apr12 May12 Jun12 Jul 12 Aug 12 Sep12 Oct12 Nov12 Dec12 Jan13 Feb13 Mar13

50%

75%

TataMo tor Piaggio M&M Others

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News and Events

Major developments in the auto sector

April 2013

Honda launches Amaze, to roll out UVs over two-three years

Honda Amaze

Japanese carmaker, Honda Motor launched its much-awaited compact sedan Amaze at an aggressive price range of INR0.49m to INR0.76m (ex-showroom, Delhi). Honda's game changer model and its first diesel product, Amaze would be country's most fuel-efficient car with a mileage of 25.6 kmpl, as per the company. The four diesel options come in priced band of INR0.59-0.76m, while the six petrol trims would be available at INR0.49-0.75m. The petrol option has a 1.2 litre i-VTEC engine. Its manual transmission delivers a fuel economy of 18 kmpl, while the automatic offers 15.5 km in every litre. Honda Motor is readying to roll out in two to three years a slew of diesel variants and two new utility vehicles that will enable the Japanese car maker to participate in the fastest-growing segment in the Indian passenger vehicle market. An MPV (multi purpose vehicle), based on the Brio platform codenamed 2NH, is likely to hit the market at the end of 2014, which will be followed by a compact SUV (sports utility vehicle) based on Jazz platform in 2015. Hironori Kanayama, MD, Honda Cars India, who underscored India being a "strategically important market" for Honda's global operation, said: "Our counter attack in India has just begun with the Amaze. We have a lot to do. Small cars, UVs are all under study. The SUV market is the fastest growing segment and we are studying every segment surrounding the UV space, small or premium. You can anticipate some interesting moves from Honda." With the launch of new models, including full model changes (Jazz and City), Kanayama says Honda will cater to 50% of the overall Indian passenger vehicle market from the current 10%. Honda Motor Corporation has set itself a target of selling 6m cars, up from 4m at the end of 2012, and the company believes a large part of this growth will come from emerging market like India. The company is investing INR25b for setting up an additional assembly line in Rajasthan, Tapakura, which will take up the company's total capacity to 0.24m units per annum by the 2014-end. This can be further scaled up to 0.36m units. The company is increasing the number of dealers from 150 to 162 across India this year to promote the sale of Amaze whose target buyers seem to be middle-income and middle-aged businessmen. The company is now focusing on tier-2 and tier-3 towns and cities for its new, prospective buyers.

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Royal Enfield

Royal Enfield starts new plant, targets to sell 175,000 units in CY13
Royal Enfield has commenced operations at its new plant at Oragadam, Chennai. Siddhartha Lal, (MD & CEO of Eicher Motors) believes Royal Enfield's new plant coming up in Oragadam near Chennai next year will "once and forever" change the company. "We are taking this new plant as an opportunity to upgrade ourselves to absolute global standards in terms of manufacturing excellence". The Oragadam facility will operate in tandem with the existing plant in Tiruvottiyur for motorcycle assembly next year. This activity will, thereafter, be confined to the new unit while engines will still be machined and assembled in the old plant. "Initially in 2013, we will do a combined 150,000 units, while Oragadam can do twice as much on its own subsequently," Lal says. Lal's next step is to target markets beyond India. He shrugs off the ongoing crisis in Europe saying the company's exposure to this part of the world is "extremely small". Over the next decade, Royal Enfield sees developing markets as the bigger play, a list that includes Latin America, Southeast Asia, Africa and West Asia.

Mahindra Genio

South Africa first to get new Mahindra vehicle 'Genio'

South Africa has become the first country outside India to get the latest product 'Genio' from the Mahindra range of pick-up vehicles. Mahindra South Africa has added another variant to its range of one-tonne Genio pick-ups that are proving very popular in the country. "This new addition is in response to customer requests and in line with Mahindra's policy of listening to feedback and adapting our product range to meet these needs, when volumes make it viable," said Mahindra South Africa CEO Ashok Thakur. "In the case of the Genio with drop sides and a flat load bed we see this is well suited to small business operators in need of a versatile, reliable and tough 1.2 tonne light commercial vehicle to facilitate their daily working operations and delivery needs," Thakur said. In the past, Mahindra has adapted Indian domestic models, such as the Bolero, Scorpio, Thar and Xylo, for sale in the South African market, but the Genio is the result of a new global approach to research and development. "The Genio is the result of extensive worldwide research in terms of what the pick-up buyer requires in the various markets where this type of vehicle is popular," Thakur said, adding that South Africa was the first country outside India to receive the Genio. Mahindra sees the Genio as a versatile pick-up that sits between the requirements for a workhorse bakkie and a recreational vehicle.

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The Genio is made at Mahindra's state-of-the-art manufacturing facility in Chakan, which was completed in November 2009, with an initial manufacturing capacity of 300,000 units a year and the potential to double this output in the future. Mahindra South Africa is a fully-owned subsidiary of the USD 15.9-billionMahindra Group, Mahindra & Mahindra of India, which was established in 1945. The company operates in South Africa with over 50 dealerships, and is also exporting vehicles to Zimbabwe, Zambia, Botswana, Swaziland and Namibia. Mahindra South Africa has achieved significant growth in the country since its establishment in October 2004, and since then, the company has sold a total of approximately 18,000 vehicles.

Volkswagen launches Polo petrol variant at INR0.79m

Volkswagen launched a petrol variant of its popular hatchback Polo. The 1.2-litre new Polo is priced at INR0.79m (ex-showroom Delhi), said Arvind Saxena, Managing Director for passenger cars, Volkswagen Group Sales India after the launch here. "Fuel efficiency has become vital for every customer looking at purchasing a new car and the Polo GT TSI is an answer to this demand offering maximum power and minimum consumption," Saxena said, adding that the TSI is a pioneering technology of petrol engines by Volkswagen. Volkswagen, the largest European car maker, sells the Polo, Vento, Jetta, Passat and the Touareg in the domestic market.

Mercedes-Benz to roll out 3 new models in 3 months

The German luxury carmaker Mercedes-Benz has set a hectic pace for itself and expects to launch three new models in India within three months. The company will introduce its all-new luxury sports utility vehicle GL in the presence of German tennis star Boris Becker on May 16 in New Delhi. This will be followed by the launch of the diesel variant of its B Class and the globally popular A Class hatch in both the petrol and diesel variants. Eberhard H. Kern, Managing Director and CEO of Mercedes-Benz India, said, "The company will significantly expand its product portfolio during the year and thereby be able to address a much larger luxury car market." He told Business Line that the luxury auto market in India is set to grow significantly from barely 1.2% of the 2.6-million passenger car market to about 4% of the expanded market by 2020. "We are currently functioning in India within fewer segments with the C, E and S Class and the petrol variant of the B Class. But wherever we are present we have a leadership role," he said.
May 2013 32

Dashboard

"Having closed 2012 with overall sales volumes of about 7,000 cars, and registering a growth of about 5.3% during the first quarter ended March 31, 2013 with 2,009 cars, we expect to register double-digit growth during the current year with the expanded portfolio," he said. The company last year commissioned a new paint shop at Chakan in Maharashtra, which can handle up to 20,000 cars. It expects to complete the expansion project, which will take the capacity to 20,000 vehicles per annum, by the year-end.
BMW Mini Cooper

BMW starts production of 'MINI Countryman' at Chennai plant

A year after introducing its popular 'MINI' range of cars in India, luxury car maker BMW has begun the local production of 'MINI Countryman' at the facility here. "A new chapter is set to be written in MINI's global success story as cars from the British premium brand roll off an assembly line outside Europe for the first time. The Group today announced the commencement of local production of MINI Countryman at BMW Plant near Chennai," BMW India said in a statement. BMW Chennai plant, spread on a 40-acre land at Mahindra World City in Singaperumalkoil, currently produces BMW 3 series, BMW 5 series, BMW X1, BMW X3. Besides MINI Cooper, the company in 2013 will also produce BMW 7 series and the BMW 1 series, the statement said. "With the production of MINI Countryman at the BMW Plant Chennai, MINI is the first premium small car to be locally manufactured in India and expects significant growth over the medium and long-term," it said. The cars manufactured from the facility would fulfill the same quality standards that apply to production of BMW group models worldwide, it said. The new MINI local production facility has been brought on stream just a year after the start of MINI sales in India and would help meet the growing demand, it said. To be introduced in two diesel variants -- MINI Cooper D Countryman and MINI Cooper D Countryman High in India, the company said, the Chennai facility would also produce petrol variant. However, the car maker said the MINI Cooper S Countryman, MINI Cooper S Countryman High would be imported in India as a completely built units along with the petrol variants of MINI Cooper, MINI Cooper S, MINI Convertible. The MINI Cooper range of cars currently available in India are priced between INR2.7m for the base variant and INR3.75m for the top end model. India is the 100th market for the sales of BMW MINI and the car maker has established five exclusive outlets in the country, the release added.

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Toyota Prius

Toyota to explore possibility of more hybrid models in India

Japanese auto giant Toyota will consider introducing new hybrid vehicles in India in future encouraged by gradual increase in sales of its only such model 'Prius' in the country. As part of a global initiative to develop fuel-efficient and environment-friendly vehicles, Toyota Motor Corporation (TMC) will launch 18 new hybrid models by 2015. The company, which is present in India through a joint venture with Kirloskar Group, may also consider assembly of hybrid cars if demand for such vehicles increases in future. "We have already introduced the Prius to Indian market and we will continue to study the Indian market to introduce new hybrid models in India at appropriate times," a TMC spokesperson told to media from Tokyo. The company is planning to introduce 18 new hybrid models by 2015, of which 13 are new vehicles and five will be model changes, the official said. When asked if the company will start assembly of hybrid models at any of its two Indian plants, the spokesperson said: "Depending on the future market dynamics, we will study and take a decision accordingly." The official, however, declined to comment on any possible timeframe to start CKD (completely knocked down) operations of hybrid vehicles in India saying "it is related to future production plans". The company currently sells only Prius hybrid model in India as a fully-imported vehicle. The sales of the model increased over 70% to 12 units in 2012-13 from 7 units in the previous financial year.

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N O T E S

May 2013

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