Auto sales for June-15 have been broadly on expected lines. Passenger vehicles saw modest growth due to high base effect. Maruti Suzuki's dispatch volumes were inline. With retails of 108k (flat YoY), stocks remained stable at 4 weeks. M&M's UV volumes were lower than expected. Tata Motors reported healthy volume growth on low base.

In two-wheeler segment, Hero posted flat dispatches as company is focused on lowering inventory levels. As per Bajaj management, its domestic 2W volume growth was ahead of industry growth.

Industry-wide MHCV volumes growth is likely to have remained in +25% YoY range. AL continues to outperform on strong demand uptick in south India.

Commenting on the June auto sales numbers, HDFC Securities said, ''New launches ahead of the festival season and softening interest rate cycle are near term demand drivers.

Subsequent to four successive months of decline in domestic 2Ws, the broking firm expects June-15 volume growth to be flat to positive.

Prospects of normal monsoons are raising hopes of 2W demand recovery in 2HFY16. MHCVs maintained firm growth trend, however, LCVs volumes remained weak."

HDFC Securities prefers Tata Motors, Maruti Suzuki and Hero Motocorp in the large cap auto space.

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