A $27 billion fund manager sees better profit margins on Indian automobiles
In an interview with CNBC-TV18, Vetri Subramaniam, Chief Investment Officer at UTI AMC, who manages funds worth over $27 billion, said that car sales have not only recovered to their 2019 levels but are also on track to exceed them this year.
Several parts of the Indian auto industry are on the cusp of seeing growth and margin expansion, according to Vetri Subramaniam, Chief Investment Officer at UTI AMC.
In an interview with CNBC-TV18, Vetri said that car sales have not only recovered to their 2019 levels but are also on track to exceed them this year.
According to Morningstar India, UTI has 14.4% of the large-cap fund assets in consumer cyclical sectors (which is made up of the auto sector, among others) compared to 10.66% for the category, with the highest allocation to Maruti Suzuki.
| Largest Auto Stocks in India | |
| Stock | Market capitalization in cr (as of Nov 7) |
| Maruti Suzuki | 311,287 |
| Tata Motors | 214,639 |
| Bajaj Auto | 153,150 |
| M&M | 185,584 |
| TVS Motor | 76,377 |
Vetri’s comments come amid a pick-up in sales in the festive season, which was set against the crucial backdrop of falling passenger car sales in recent times.
Passenger vehicle sales in September 2023 grew 19% year-on-year to 3.32 lakh while two-wheeler sales jumped 21.7% to 13.12 lakh.
However, the growth in passenger vehicles has been led by strong growth in premium cars. Experts believe this could be due to the easier availability of credit and rising aspiration.
Recently, Maruti Suzuki said it sees industry-wide sales reaching one million cars by Bhai Dooj, the culmination of Diwali, signalling an 18% increase in year-on-year growth for the festive period starting with Onam in August.
During Navratri, the industry witnessed a surge in bookings, buoyed by the introduction of compelling new models, particularly SUVs and the availability of attractive consumer offers.
On two-wheelers, UTI’s Vetri, who manages funds worth over $27 billion, said sales are currently 20% below their previous high, but the festive season is ushering in a wave of optimism.
Going forward, festivities along with harvest season (especially paddy) are expected to boost two-wheeler sales, with optimism fuelled by new schemes and a push towards electrification.
Bajaj Auto's Executive Director, Rakesh Sharma, echoed Vetri's positive outlook, noting an increase in customer visits to dealerships during the festive season. Sharma anticipates a 15-18% growth in the two-wheeler sector throughout the festive period
The Federation of Automobile Dealers Associations (FADA) also believes the near-term outlook remains robust, especially for the premium segment.
However, FADA also underlined that sales of passenger cars remain muted and pointed to rising inventory levels across showrooms, something it said manufacturers should pay “urgent attention to”, ostensibly by way of offering more discounts and offers.
(Edited by : Shweta Mungre)
First Published: Nov 7, 2023 3:17 PM IST
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