While two-wheeler retail sales are expected to grow 4-5%, Passenger Vehicle (PV) retail sales are likely to jump 5-7% YoY, analysts said. Moreover, with freight demand likely to improve post-monsoon owing to the upcoming festive season, MHCV retail may grow 4-6% YoY.
Tractor volumes are expected to grow 3-5% YoY led by healthy reservoir level and favorable crop realization, as per estimates by brokerage firm Motilal Oswal Financial Services. However, demand has remained muted in the southern markets, it said in a report.
Let us check the expected automobile sales in August across segments:
Two-Wheelers
Two-wheeler retail sales in August are expected to improve 4-5% YoY driven by stable urban demand along with gradual recovery in the rural market. Channel checks by brokerage firm Motilal Oswal suggest urban volume growth has been in the range of 5-7% YoY while rural growth has been 3- 5% YoY.
“iQube, which had a waiting period of one month, is now readily available post the decline in sales due to FAME subsidy reduction. To counter the competition in the 100CC segment, prices for both TVS Radeon and Hero MotoCorp’s HF Deluxe have been cut by ₹4,000-5,000. The volumes of HF Deluxe have been adversely impacted by just 10-15% due to Shine 100, while there is no major impact on Splendor. However, this is likely to come down further going forward,” the brokerage report said.
Additionally, inventory across most of the two-wheeler dealers stands healthy at 35-40 days with Hero MotoCorp being the highest with 45-50 days. It expects dispatches for Hero MotoCorp and Bajaj Auto to decline 7% and 18%, YoY, respectively while the same is projected to grow for TVS Motor Company and Royal Enfield by around 3% and 8% YoY.
Also Read: TVS Motor’s bold EV play: What investors need to know
Passenger Vehicles (PV)
Passenger Vehicles retail sales are estimated to rise 5-7% YoY fueled by execution of order backlog and easing supply chain issues. Inquiries and bookings continue to remain stable MoM.
“Tata Motors launched its twin-cylinder CNG technology in all its petrol-powered models (ex-Nexon) and initial feedback from dealers suggests 20% incremental sales from these variants. Maruti Suzuki India dealers do not expect a dent in demand for their CNG-powered vehicles in the short term and expect this move by Tata Motors to expand the CNG market as a whole,” said the report.
Inventory days have inched up across geographies and remained on the higher side at 40-45 days in South India while remaining lower in western and central parts at 35-40 days each.
Dispatches for Maruti Suzuki, Mahindra & Mahindra (including pickups) and Tata Motors are expected to grow 11%, 12% and 3% YoY.
Commercial Vehicles (CV)
MHCV retail is anticipated to grow 4-6% YoY during the month as freight demand is likely to improve post-monsoon due to the upcoming festive season. LCV volumes are projected to decline 3-5% YoY. Due to seasonality, return freight demand has been muted during the month, according to the report.
With upcoming festivals and positive macro outlook are likely to drive healthy growth from mid-September, the brokerage said.
It expects dispatches for Tata Motors CV to rise by 7%, Ashok Leyland to grow by 10% and VECV to jump by 17% YoY.
Also Read: Jio Financial Services to enter insurance segment; may partner with global players, says RIL Chairman Mukesh Ambani
Tractors
Tractor retail is likely to grow 3-5% YoY fueled by healthy reservoir level and favorable crop realizations. However, demand has remained muted in the southern markets.
Inventory level has started inching up as we approach the festive season and it currently stands at 6-7 weeks vis-à-vis 5-6 weeks in July 2023.
Dispatches for M&M are estimated to grow 7%, while those for Escorts are likely to decline 1.5% YoY.
Motilal Oswal said it prefers CVs over other segments, led by strong demand and a stable competitive environment.
“We prefer companies with higher visibility in terms of demand recovery, a strong competitive positioning, encouraging margin drivers and a strong balance sheet,” Motilal Oswal said.
Tata Motors and Ashok Leyland are its top OEM picks.
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Updated: 28 Aug 2023, 04:52 PM IST
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