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Two-wheelers (2Ws): Destocking comes to a halt

Hero Motocorp (HMCL) reported wholesale volumes at ~394k units, up 1% MoM (flat YoY). Motorcycle volumes rose 1% MoM vs scooter down 2% MoM.

Bajaj Auto (BAL) sales fell 8% MoM to ~281k units. Domestic sales dipped 3% MoM to ~249k units while exports declined 14% MoM to ~133k units. On segment level, motorcycle sales contracted 6% MoM (domestic up 2%, exports down 12%) to ~247k units while 3Ws declined 22% MoM to 34k units. Exports continued to slide from the highs of Jun’22 and, as per management, are set to bottom out at current levels. We expect domestic wholesales to pick pace from Jan’23 with nearly full destocking being done in the system.

TVS Motor (TVSM) reported 13% MoM volume decline at ~242k units, down 4% YoY. Domestic 2W volumes shrank 16% MoM (increased 10% YoY) to ~161k units while 2W exports fell 8% MoM to ~66k units. Overall 3W volumes at 14k units were up 6% MoM (down 8% YoY). On sub-segment basis, motorcycle volumes fell 14% and scooter volumes fell 8%, MoM. Moped volumes too dipped 39% MoM while iQube sales stood at ~11k units.

Royal Enfield reported 3% MoM decline in volumes to ~68.4k units (down 7% YoY) while exports remained flat YoY at 8.6k units. Motorcycle sales in the 350cc segment were down 7% MoM to ~61k units due to typically lower despatches in the last month of a manufacturing year; sales in the >350cc segment contracted 36% YoY to 7.2k units.

Passenger vehicles (PVs): Seasonally, a month of weak wholesales

Maruti Suzuki’s (MSIL) domestic despatches declined 16% MoM to ~117k units (down 10% YoY). Exports were up 10% MoM (down 2% YoY) at 21.8k units. MoM overall volume decline was driven by production holidays impacting wholesales in the mini and compact segments, with other key areas (e.g. UVs, vans, exports) up MoM. Assuming steady monthly retails, we expect wholesales to recover from Jan’23 itself in tandem with planned launches ahead.

 Mahindra & Mahindra (M&M) reported 6% MoM decline in PV volumes to ~28.5k units. We believe, strong orderbook for key models, launch of EV model XUV 400, and increase in capacity w.e.f. Apr’23 would boost monthly UV volumes to >35k units p.a. consistently from FY24E; this would also be aided by gradual improvement in chip supply.

Tata Motors PV volumes finally corrected post scaling new highs since Jun’22. Sales were down to 40k units (vs ~47k units MoM) with EVs registering 3.9k units (vs 4.4k units MoM).

Hyundai overall volumes dipped 10% MoM with domestic volumes down 19% MoM (up 20% YoY) and exports up 19% MoM to 19k units.

Our view: 2W domestic inventory destocking seems to have come to an end with wholesale trends largely converging with retail trends on MoM basis. Though the declining trend continued unabated since Oct’22, it was expected (litmus test would be from Jan’23 to end of marriage season in Jun’23). Domestic PV wholesales remained muted due to production shutdowns and typically lower despatches in the last month of a manufacturing year. M&HCVs reported a major positive surprise in Dec’22 post consolidating at similar levels since Sep’22. Seasonally, Q4 is the strongest quarter for CV sales. Tractor retails remained stable in a narrow band with monthly and seasonal volatility being in line with expectations at the wholesale level.

CVs: M&HCVs post a strong performance

Eicher Motors CV segment volumes were up ~47% MoM and 17% YoY at ~7.2k units.

Tata Motors delivered a strong show in CVs with overall volumes up 20% MoM (6% YoY). M&HCV volumes were up 33% MoM while LCVs rose 9% MoM to 16.4k and 16.5k units, respectively.

Ashok Leyland reported M&HCV volumes at ~11.4k units, up 20% MoM and 50% YoY, with LCV volumes up 12% MoM at 5.7k units.

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