A report on automobile industry by IndiaNivesh Securities Ltd.


Maruti’s struggles continue; Hero relying on rural recovery; TVS most optimistic backed by premium offerings; Bajaj most well placed 

As the automotive dealers from Uttar Pradesh (UP) and Madhya Pradesh (MP) contributes nearly 20% to the total automobile sales in the country, gathered in a conference to get a flavour of the ground reality in these markets. This gathering covered players across the passenger vehicle and two-wheeler segments, with companies like Maruti Suzuki, Hero MotoCorp, Bajaj Auto and TVS Motors.

Executive summary

  • Maruti Suzuki: Maruti dealers, especially NEXA dealers, continue to face severe struggles. Walk-ins are as low as 40% of the normal rate. The company has raised discounts and even offering higher margins to dealers on their diesel variants. Despite higher discounts, the general customer concerns are the availability of spare parts and resale value of diesel models following the company’s announcement about discontinuing them in the near future. Dealers believe that a revival is possible only with further product enhancements.
  • Hero MotoCorp:Inventories have risen to 55–60 days. Compared to last year, dealers are offering about 40–60% higher discounts. Around 60% of their annual sales happen during the festive period of Sep-Nov. Dealers are hopeful of a revival in the upcoming festive season and are gearing up inventories.
  • Bajaj Auto:Inventories have already been corrected to the normal, i.e. 45 days and, in some cases, even to as low as 35 days. After the withdrawal of the free insurance scheme in July, sales have been impacted and now stand flattish YoY. Bajaj dealers seem well placed with their working capital situation and are hopeful of strong growth led by newer launches.
  • TVS Motor:Inventories have already been corrected to the normal, i.e. 45 days. The dealer believes TVS Motor has always managed to change with time and adapt the newer circumstance very efficiently. He expects the upcoming festive season should be better due to better marketing initiatives and enhanced offerings.