November official auto sales: Continued weakness

Leonardo Henry Gavaza, CFA
Senior Research Manager
Research Department

Based on sales figures released by Gaikindo (4W association) and AISI (2W association), November 4W sales weakened further to 91.3k units, down 13% m-m and 18% y-y, with 2W sales reaching 582k units, down 14% m-m and 15% y-y (exhibits 1 and 2). We believe this is a move to lower inventory levels ahead of low demand in the coming months due to the subsidized fuel-price increase in November.

ASII booked November sales of 46k units, down 8% m-m and 25% y-y, reflecting a monthly market share of 50.0% (Oct-14: 47.2%; Oct-13: 54.4%). Due to weak Livina and March sales, Nissan November sales reached 1.7k units, down 42% m-m and 63% y-y. Honda fell 17% m-m to 12k units, up 30% y-y, on lower Mobilio sales.  

On a more positive note, Honda’s November 2W sales reached 425k units, up 1% y-y but down 6% m-m, with a significantly improved market share of 73.0% (Oct-14: 67.0%; Nov-13: 61.5%). Yamaha booked weak November sales of 127k units,
down 42% y-y and 33% m-m.

We expect the recent fuel-hike impact to be milder for the 2W segment (up 3% y-y) than for 4W (flat y-y) in 2015. Overall, on top of flat 4W sales volumes in 2014-15F, we expect weak margins to persist due to intense competition. We expect aggressive marketing in the MPV and SUV segments to lead to market-share erosion and margin pressure for Astra International, while several new dealership developments could bring down Indomobil’s margins.  

On expectations of flattish volume growth due to policy headwinds plus lower ASPs and margins on competition, we retain our view that there would be continued weakness in the sector. Underweight.