Recovery in sales driven by festive inventory buildup
In September, the auto wholesale numbers exhibited a positive trend, as the overall OEMs benefitted from the inventory build up for the much-anticipated festivals in October. PV growth remained flattish on an annual basis while registered low single-digit growth monthly basis. The recovery in the segment was primarily driven by the combination of the festive season and the introduction of newer models.The2W segment was a star performer yet again as it continued to display its robust double-digit growth despite a slowdown expected in the market during the Shradh-Pitru Paksha period. The dealers continued to build 2W inventory ahead of the major festivities, anticipating higher traction during the period. CVs experienced a marginal decline during the month as the underlying demand continues to remain weak as the infra projects tendered by the government are yet to kick in, leading to delayed purchases by fleet operators. Tractorswereabletoshowcase a positive growth trajectory despite last year’s high base. The growth can be attributed to above-average rainfall in key regions across the nation and improved sowing of crops. Despite the underwhelming retail demand during the September festivities (Ganesh Utsav in Maharashtra and Onam in Kerala), the overall industry showcased signs of recovery, further bolstering expectations of better salesinOctober. We expect increased retail activity during the Diwali season as consumers delaying their purchases are likely to buy now, given the all-time high discounts across various models and the reduced wait times.
Passenger Vehicles
In September, the segment recorded a marginal annual growth. The growth can be primarily attributed to the robust M&M sales, as the market continued to favour the SUV segment, while hatchbacks and entry-level cars continued their sluggishness. Despite Flat domestic market, the export market experienced robust double-digit growth. Maruti Suzuki experienced a low single-digit decline as the company continued to reduce its dispatches to balance out inventory levels. Despite this, the company maintains a strong market presence, driven by the growing popularity of its compact and midsize SUVs. The launch of the new Brezza and updates on existing models have aided the existing sales of the company. The overseas market also favoured the company well. Tata Motors also followed suit in experiencing high single digit degrowth. The decline can be attributed to the adjustment in dispatches in reaction to the slowing retail demand and seasonal effect. The company also displayed poor performance on the export front, owing to a slowdown in the European Markets. TheEVportfolio was also hurt by the lapse of registration and road tax waivers in key states. M&M continued to maintain an edge in the segment,with the help of its pure SUV portfolio. The company recorded a robust double-digit growth, as the SUV preference amongst consumers continued to flourish. The company’s growth is largely driven by the robust demand garnered by its Thar and XUV700 models. TharRoxxhas also been able to garner significant traction amongst buyers, with initial bookings showing positive signs. Going ahead, the segment is expected to benefit from the upcoming festivals while we expect lower traction in EVs, with the launch of the PMe-Drive scheme which has excluded PVs.
Two Wheelers
During the month, the 2W segment delivered robust double-digit growth. The overall segment maintained a positive traction on a YoY/MoM basis, while the export business continued to grow. The growth is driven by positive sentiment backed by a sustained recovery of first-time buyers in the urban/rural markets. Bajaj Auto in the segment has been able to record a robust double-digit growth rate as the dealers ramped up inventory ahead of the major festivities in October. The company has also witnessed a revival in key export markets as the overseas dealers build up inventory to cater well to retail demand during the month of December (demand is high in the overseas market during this month). The company expects exports to grow by 10% in the coming months while they are expecting healthy growth in the domestic market during the same period. TVS also delivered strong growth during the month. The launch of the new Jupiter was well received,with 30-40% customers being upgraders and 30-40% customers being from other competing brands. The export markets also remain positive for TVS. Hero Motocorp experienced strong growth across CC segment. The company has been able to expand its global business and registered a growth of 30% in its YTD sales. The company is expecting healthy growth in October on the back of strong pipeline bookings and increased footfall. The company launched the new Hero Xtreme 160R 2V 2024 Edition in September at an attractive price Rs. 1,11,111 across the country which will further help the company to enhance growth. Eicher Motors also posted stellar growthonaYoYbasis on account of strong demand following recent product launches and aided by previous year’s low base. On the E2W front, Bajaj Auto has overtaken Ola Electric to become the market leader in terms of volumes during September. TheslipinOla’s market share was due to service related problems faced by retailers which affected their sales. TVS continues to gain market share in the segment, selling over 16,000 units while Ola managed sales of ~23,000 units. Bajaj recorded total EV sales of over 25,000units,securing second spot in the market (as per market share).
Commercial Vehicles
During the month, the segment experienced a marginal decline on a yearly basis, while the growth remained healthy on sequential basis.Despite lower retail demand, dispatches continued to outpace retail. The subdued demand is driven by lower fleet utilisation, lower freight availability, and extended payment cycles from the government and the delay in materialisation of infra projects. In the segment,M&M delivered strong double-digit growth while exports declined by double digits. VECV also registered a modest single mid-digit growth in the domestic market while witnessing some robust recovery in the overseas market. On the other end of the spectrum, both AshokLeylandandTata Motors registered a decline in wholesales as an effort to limit their inventory. With the introduction of PMeDrive, we are expecting healthy growth in eCVs going ahead.
Tractors
In September, tractors as a segment were able to record a modest growth on an annual basis, but delivered robust growth on a monthly basis. M&M and Escorts both recorded low single-digit growth each, while the export markets remained tough owing tothegeo-politicaltensions in the neighbouring countries. For M&M, dispatches were in line with industry estimates while Escorts recorded robust growth,beating market estimates. The healthy growth seen in the tractors segment was largely due to the above-average rainfall in key regions,and we expect the demand to remain healthy in the second half of the fiscal year. According to M&M, smart recovery in kharif sowing with more than 110 mn hectares and the start of festive fervour is expected to bring positive sentiment among farmers. With the stategovernmentofJharkhand and MP providing subsidies, the demand is expected to pick up in these states going ahead.
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