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Festive demand boosts wholesale growth
October’s wholesale numbers showed positive growth, driven by inventory buildup for festivals and strong retail demand. With Dussehra and Diwali falling in the same month, annual comparisons are skewed. Passenger Vehicle (PV) sales were flat year-over-year but saw healthy double-digit sequential growth due to festive clustering, boosting wholesale demand and retail recovery. Overseas market recovery also improved OEM sentiment. The two-wheeler (2W) segment led the market, showing annual growth in the early teens and mid-single-digit sequential growth, supported by strong rural demand and sustained urban sales, alongside flourishing exports. Commercial Vehicles (CVs) underperformed, with flat year-over-year growth and strong sequential performance; volumes lagged due to lower Medium & Heavy Commercial Vehicle (M&HCV) and bus sales. Tractor sales were robust domestically, thanks to good rainfall, enhancing rural demand and crop outlook, though exports remained pressured. With the wedding season ahead and high Q3 demand, H2FY25 market outlook remains stable, with no immediate macroeconomic challenges.
Passenger Vehicles
In October, the PV segment showed mixed results, with Maruti Suzuki (MSIL) reporting a single-digit year-over-year decline and double-digit month-over-month growth. Maruti’s entry-level segment faced pressure due to weaker-than-expected retail demand and rising inventory, though it countered declines with special editions of the Baleno and Grand Vitara. The company achieved its highest-ever monthly exports, aiming for 850,000 units globally by the decade’s end. Tata Motors maintained flat sales, beating decline expectations, despite an early annual maintenance shutdown. Tata’s EV portfolio also showed a recovery, and its luxury brand JLR reported 20% retail growth. Mahindra & Mahindra (M&M) led growth in the segment, driven by strong demand for SUVs and healthy double-digit annual growth, with plans to launch eSUVs, XEV 9e and BE 6e, supporting further expansion. SIAM revised its FY25 growth outlook for PVs to 3%-5% due to market conditions.
On the EV front, October’s festive season boosted sales, ending a two-month decline with increased discounts and favorable government support for charging infrastructure. The market outlook remains positive, with anticipated retail demand post-festivities and stabilized inventory levels.
Two Wheelers
October’s domestic two-wheeler sales showed strong growth, driven by festive demand and a resilient rural economy, with Bajaj Auto being the only major player to post a decline. Bajaj saw a high single-digit year-over-year drop due to destocking measures, though exports remained solid in key markets. The company recorded about 30% YoY retail growth (20% on a comparable basis). TVS reported early double-digit growth, with its EV sales up 45% from a low base, and modest export growth despite a sequential decline. Hero MotoCorp (HMCL) posted strong double-digit growth, led by demand in the 100cc and 125cc segments, achieving record sales on Dhanteras. Nine new HMCL Premia outlets enhanced its premium lineup, while exports also showed robust growth. Royal Enfield achieved record monthly sales driven by festive demand and strong exports in South Asia and Latin America.
In electric two-wheelers, TVS regained the No. 2 market position, while Ola’s discount-driven strategy solidified its lead with a 29.9% market share, up from 27.3% MoM. TVS and Bajaj Auto followed with 21.5% and 20.3% shares, respectively. Growth may moderate in the coming months due to a high base from the prior year.
Commercial Vehicles
The CV segment highlighted a mixed performance during the quarter, as the demand for M&HCV remains under pressure, affecting Ashok Leyland and VECV sales. The subdued demand can be attributed to lower-than-expected replacement demand and a pause in infrastructural activities. The decline experienced by VECV and Ashok Leyland is primarily due to the previous year’s high base and subdued retail demand in the market. Subpar fleet utilization further impacts the sales. However, Tata and M&M exhibited modest growth during the month, which is in line with the market estimates. The export market, however, remains optimistic for the segment, with Mahindra and VECV leading. The increase can be attributed to last year’s low base for Mahindra and VECV’s healthy expansion to key markets.
Tractors
In October, the segment recorded robust domestic sales growth on both a YoY and MoM basis; however, the export market remained under pressure. M&M registered healthy double-digit growth during the month, beating the market estimates, driven by new launches and healthy monsoons. The company’s exports remained largely subdued but improved sequentially, indicating an enhanced overseas scenario. Escorts also reported healthy monthly sales numbers, led by the concentration of festivals. The growth was also driven by favourable macroeconomic conditions, increased Minimum Support Price (MSP), and an above-average monsoon season. With a healthy demand outlook fuelled by better crop visibility and improving rural demand, we remain positive in the segment.
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