03
Jun
12

Auto companies flat May numbers..

Auto companies across the board declared poor may 2012 sales number. Market leader, Maruti Suzuki total sales declined 5% to 98,884 units. It goes without saying that economic slowdown, high interest costs and high fuel prices especially petrol is hurting Maruti. Majority of Maruti current capacity is petrol and after recent sharp petrol price hike, company will take some time to adjust to diesel vehicles growing demand. This fact is corroborated by drop in its mini segment sales whereas diesel versions of Swift and Dzire continued to show sales growth. In fact in June, automaker total sales could drop further more.

Tata Motors domestic sales for May stood at 20,503 units versus 19,401 units last year (growth of 5.68%). But its Medium & Heavy commercial vehicles saw dip in sales. Since JLR contributes more than 90% profits of Tata Motors combined profit, JLR May numbers would be far more important. Luxury automaker numbers would decide whether Tata motors stock would go down below 200 or not. M&M was an exception and its overall may sales registered growth of 26.7% over last year. Tractor sales were again sluggish and rose only 0.3%.

In one of my previous post on Tata Motors https://writingoptions.wordpress.com/2012/06/01/tata-motors-stock-hammered-down/, I had written about being cautious in selling Tata Motors OTM calls. But on Friday, after seeing sluggish numbers I had started selling calls aggressively. I have also sold Maruti 1300 June series calls. Given the sharp breakdown in Maruti stock, I might also sell 1250 calls on any rebound. One thing that has to be kept in mind is possibility of sharp rebound in Tata Motors if market stabilizes. It has fallen very sharply after Q4 results.

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