Auto Stocks Outlook for the week: 01.10.2012-05.10.2012

[rupeedesk]

Stocks of frontline auto companies, next week, are expected to take cues from September sales numbers. Auto manufacturers would detail their September despatch numbers over the first two days of the next week. Markets would remain closed Tuesday for Gandhi Jayanti.

September sales data would be closely watched for a likely sales trend over the ensuing festival season. Automakers generally begin pushing stocks to dealers from September onwards in preparation for the buying rush over Dussehra and Diwali festivals. Dussehra will be celebrated on Oct 24 and Diwali on Nov 13.

This year, however, the scene has been different as dealers are already saddled with high stock levels. Inventory levels of both two-wheelers and four-wheelers are already at the tipping point. As a result, manufacturers have not been able to push as much stocks as they would have liked to.

In fact, inventory levels with two-wheeler dealers are at an all-time high of almost six weeks. Inventory levels of up to two weeks are considered healthy. Car sales in India declined by 18.56% in August, the biggest drop in 10 months. Even sales of diesel-run passenger vehicles have taken a beating despite the fuel being around 20 rupees a litre cheaper than petrol.

Hyundai, Maruti Suzuki, Chevrolet and Honda among others are offering huge discounts to the buyers, besides doling out free insurance, exchange bonuses. Maruti Suzuki, the country's largest passenger car manufacturer, has declared big discount even on its popular hatchbacks such as Alto, A-Star, Ritz and Swift.

By RUPEE DESK

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