IGI Logo

Sector Performance
The month of July was a mixed bag again for the auto companies. 2W performance in July witnessed weakness in demand both mom and yoy. 2W exports which had shown some signs of improvement sequentially in the previous months reported flattish (Bajaj Auto) to a 12% (TVS) growth sequentially. On yoy basis, still the exports growth is negative, but lower than earlier months. On the PV front, all the companies have posted good growth yoy as well as mom, led by the SUV growth story. On the CV side of the sector, we have been seeing an uneven growth in both MHCV and LCV segments both yoy and mom. Implementation of OBD-2 norms and BS VI Phase-2 led to erratic numbers in the first four months of FY 24 on the CV side of the industry. Tractors segment is witnessing strong yoy growth, while on mom basis growth was negative seasonally.

Company wise performance

Among the PV OEMs, MSIL posted 1.81 lakh units, which was a record high. On a yoy basis, the total sales in the domestic markets came in at 6.2% yoy while the exports grew by 9.3% yoy. The domestic growth came on the back of the successful launch of Invicto, Fronx and Jimny 5 door SUV in the last quarter. The continued success of these along with new Grand Vitarra and Brezza in the earlier months initiated the growth in the SUV segment earlier. Also the easing up of chip shortage led to catering of the pent up demand. Small cars in July de-grew by 53% yoy and 32% mom. The compact car segment went down by 21% yoy and was up by 4.1% mom. The UV segment grew 167% yoy and 43% mom.

TaMo’s PV segment remained flat both yoy and sequentially. M&M’s SUV segment on the other hand, jumped by 30% yoy and 11% mom. CV division was down by 0.2% yoy and 0.3% mom as the initial impact of BS VI Phase-2 implementation faded off and the fall was controlled. M&M’s tractor business in the domestic markets rose by 11.5% yoy and dipped by 44.3% mom. However, Escorts Kubota’s domestic tractor sales were up 9.7%, while dropped by 44% mom. Tractor segment’s future performance in second half of monsoon (first half was 6% above normal pan India) shall be good if monsoons turn out to be normal and impact of El Nino is minimum. Also with a further advancement of monsoon across the country coupled with adequate reservoir levels, better liquidity and consumer credit availability, we expect the demand momentum for tractors to improve in coming months.

In 2W segment Bajaj reported a de-growth of 13.6% yoy and 14.6% mom for its domestic motorcycles while in exports, motorcycles de-grew by 15.8% yoy and grew by 0.4% mom. This sequential flattish growth is a positive sign indicating exports may have bottomed out. However, we need to follow this trend closely in the ensuing months. Their 3W segment moved up by 101% yoy and 10.6% mom domestically on a good pick up in the CNG portfolio and e-3Ws. Exports of 3Ws however disappointed by posting a de-growth of 35% yoy and 0.1% mom. Hero Motocorp posted weak performance last month as sales de-grew by 12.2% yoy and 10.5% mom. TVS 2W segment reported 4.2% yoy growth of which motorcycle segment grew by 2.4% yoy and 3.9% mom, while scooters grew by 4.7% yoy, on higher e-scooter I-Qube sales (~13.2K in July v/s 14.5K in June). The sales are seen lower mom on the back of withdrawal of FAME-2 subsidy. However, sales started looking up post that. Price hikes related with this also led to some volume weakness as expected. Mopeds segment of TVS grew by 11% yoy and 4.6% mom.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at www.lkpsec.com/#foo

SEBI Registration number is INM000002483

Above views are of the author and not of the website kindly read disclaimer