The Hindu Business Line : Price hike, dip in input costs augur well for auto majors

Price hikes, product launches and a dip in input costs are likely to propel growth in the auto segment in 2007, say market players. Analysts think companies such as Maruti Udyog, Tata Motors and Mahindra & Mahindra are likely to perform well at the bourses despite product discounts, royalty pay-offs and rationalising of product prices. Shares of Maruti ended the day at Rs 905.90 (up 2.86 per cent), Tata Motors closed at Rs 917.90 (up 1.10 per cent) and M&M ended at Rs 912.35 (up 4.35 per cent).

"If 2006 was a record setting year (sales of one million plus vehicles) for the automobile industry, the beginning of 2007 could not be any better. Primary auto players such as Maruti Udyog, Tata Motors and Mahindra & Mahindra are likely to post a minimum of 20 per cent growth in profit for the third quarter of 2006-07," said an auto analyst

Sales Growth

Market leader Maruti Udyog, which recently introduced the new Zen Estilo, is about to launch the Swift diesel and the move is expected to see sales grow in spite of royalty pay-offs (2-2.5 per cent) to the parent company, Suzuki.

Additional product offerings have led to an increase in the advertising budget by 2-2.5 per cent of total sales. Analysts believe product diversity and value for money products coupled with discounts will offset the ad cost.

According to analysts, Tata Motors is expected to see a 30 per cent rise in profit for Q3 on the back of the company's recent hike in prices of commercial vehicles.

Steel Prices

The price hike vis-à-vis a drop in steel prices would enable the company to improve margins. The company had aggressively hiked prices (three times) over the last year, analysts point out. "Moreover, discounts offered for large volume vehicles such as the new Xeta 1.2 should garner more sales for the company," an analyst tracking the company said.

Tata Motors had recently launched their new Indica range. Lowering of prices of the Tata 207 DI by Rs 75,000 can lead to sales touching a new record, analysts believe. M&M is likely to see a 25 per cent growth in the third quarter with the company introducing various base models in the utility vehicle range.

More Stories on : Automobiles | Stock Markets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
SAT stays SEBI order against depositories, DPs

Idea Cellular bets big on 3G, WiMAX

Price hike, dip in input costs augur well for auto majors

Bidding process begins for transmission projects

Cabinet lifts sugar export ban

Infosys net up 52 pc in Q3

IT budgets seen rising 2-6%: Infosys

HDFC Bank Q3 net rises 31.7 pc on interest income

Special package approved for semiconductor sector

Growers report drop in arabica output

Marico: Counting on Egypt foray

IDBI rides high on IFCI gains