Auto sales remained strong with double-digit y-o-y growth across all segments in March. Within two-wheelers, TVS, Eicher and Hero all delivered strong growth with Bajaj being the only exception. Maruti and Tata Motors outperformed again in PVs. Continued strong growth in tractors and LCVs should reflect in strong Q4 earnings for M&M. Maruti, TVS and Eicher are our preferred picks. Strong growth across segments — Growth was strongest in 3-wheelers, tractors & LCVs (34-123% y-o-y). 2-wheelers, M&HCVs and PVs grew at 10-20% y-o-y. Strong performance by TVS, Eicher, Hero: In 2-wheelers, TVS, Eicher and Hero all reported strong overall growth though Hero’s performance in scooters despite a low base and price cuts at beginning of quarter is somewhat less impressive. Bajaj’s tepid 5% growth was the key disappointment. Maruti continues to outperform PV segment: While PV segment continued to underperform other auto segments, Maruti’s outperformance (15% vs. 10% for industry) continues to stand out. Tata Motors also reported strong momentum. M&HCV: Heading for a stellar Q1FY19 helped by low base — M&HCV growth remained strong at 16% y-o-y despite a relatively higher base on account of BS-IV related prebuying last year. With sales falling sharply in April/May/June, we expect 100%+ y-o-y growth in the segment for both Ashok Leyland and Tata Motors in Q1FY19.
