Published on 14/02/2018 3:36:25 PM | Source: Emkay Global Financial Services Ltd

Auto Expo 2018 Lackluster show - Lower OEM participation and launches - Emkay

Posted in Broking Firm Views - Sector Report| #Auto Sector #Emkay Global Financial Services Ltd. #Sector Report

We visited the Auto Expo 2018 to catch a glimpse of the new products and technologies. The 2018 expo witnessed lower OEM participation and lesser launches/unveilings in comparison to earlier expo. OEMs such as Bajaj Auto, Bharat Benz, Eicher Motors, Volkswagen, Ford, Harley Davidson, Nissan, etc did not participate in the event.

Key highlights of the Expo are:

* In Two-wheelers (2Ws), focus remains on premiumization in both scooters and motorcycles. OEMs such as Hero MotoCorp (HMCL), TVS Motor (TVSL) and Honda exhibited new products in higher displacement categories.

* In Passenger vehicles (PVs), there were product launches/unveilings across segments. OEMs such as Tata Motors (TTMT), Maruti Suzuki (MSIL) and Honda were more aggressive than others in showcasing new products.

* In Commercial vehicles (CVs), focus was on higher tonnage vehicles and LCV variants. OEMs such as TTMT, Mahindra and Mahindra (MM) and SML Isuzu (SM) displayed new products.  Important products in 2Ws were HMCL’s Maestro Edge 125/ Duet 125/ Xtreme 200, TVSL’s Ntorq 125, Honda’s Activa 5G/ X-Blade and Yamaha YZF R15. Higher displacement scooters (125cc) are expected to witness robust growth ahead and OEMs are coming up with more products to capitalize on this trend.

* Striking products in PVs were MSIL’s Swift, TTMT’s H5X/45X, Toyota’s Yaris and Honda’s Amaze. Among the launches, MSIL’s new generation Swift is expected to drive strong growth for the company, with order bookings of around 50,000 units. TTMT’s products – H5X/45x are likely to be launched in 2019, leading to further strengthening of product portfolio.

* Notable products in CVs were TTMT’s Signa 4323/Ultra T7/Intra, MM’s Blazo 49 Smart/37 Pusher Axle/25 Tipper and SM’s Samrat GS HD19, Sartaj GS CNG, Samrat GS Tipper chassis.

* Electric Vehicles (EVs) have been the focus area, with several OEMs showcasing products. More than 20 companies displayed over 50 products, across 2W, 3W, PV and CV segments. Major products were MM’s e-KUV1OO/Treo 3W/e-Cosmo bus, TTMT’s 12m Electric bus, Tiago EV, Tigor EV, TVS Creon Electric, MSIL’s e-Survivor and Ashok Leyland’s Circuit-S Electric bus.

* Competition intensity set to increase in PVs over the medium term, with entry of Kia Motors, which displayed 16 products from its global portfolio. It also showcased its SP Concept utility vehicle, which is expected to be launched by end of 2019. Kia Motors targets annual car sales of 300,000 in India from 2021.

* We believe that the stage is set for strong growth in automobile demand in FY19, led by: 1) increase in Government infrastructure spending and focus on rural economy, 2) strong rural demand and higher disposable income in view of 7th Pay Commission awards, and 3) new launches. Our top picks are Ashok Leyland, Mahindra & Mahindra, Escorts, Hero Motocorp and Tata Motors.

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