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Domestic dispatches remain sluggish due to lockdowns

Two-wheeler (2W): Exports provide cushion to sales

* Hero MotoCorp (Hero) has reported sales of ~183k units, down 51% MoM. Motorcycle segment dropped 47% MoM while the scooter segment declined ~87% MoM.

* TVS Motors (TVSM) has reported a 30% MoM drop to ~167k units. Domestic sales declined 60% MoM to ~52k units while exports grew 7% MoM at ~115k units. On segmental level, 2W sales dipped 32% MoM to ~155k units and 3W sales were down just 2% to ~12.5k units (led by exports). On a sub-segment basis, motorcycles and scooters declined 6% / 70% MoM to ~125k / 19.6k units respectively, while mopeds slumped 65% to ~9.6k units.

* Bajaj Auto (BAL) has reported a 30% MoM drop to ~272k units. Domestic sales fell 55% MoM to ~60.8k units, while exports too declined 17% MoM to ~211k units. On a segment level, motorcycle sales shrunk 31% MoM (domestic: -52%, exports: -19%) to ~241k units while 3Ws fell 21% MoM at ~31.3k units.

* Royal Enfield has reported 43% YoY / -49% MoM growth to ~28.5k units with new product launches (e.g. Meteor) aiding volume growth. Motorcycle sales in 350cc segment grew 30% YoY to ~23k units while the >350cc segment rose 190% to ~4.6k units. Exports reported 60% MoM growth to 7.2k units.

* HMSI reported 1% YoY / -79% MoM growth with domestic sales down 28% YoY / 84% MoM to ~39k units while exports dipped 55% MoM at 19k units.

Passenger vehicles (PVs): Plant shutdown, regional lockdown exacerbate drop

* Maruti Suzuki (Maruti) dispatches were down 71% MoM to ~46.5k units due to lower domestic dispatches (down 75% MoM to ~35.3k units). Mini-vehicle segment shrunk 81% MoM at ~4.7k units while the compact segment fell 72% MoM to ~20.3k units. UV segment dispatches declined 75% MoM at ~6.4k units. Dispatches to Toyota also saw a drop (71% MoM) at 1.5k units. Domestic sales (ex-commercial & Toyota dispatches) nosedived 76% MoM at ~32.9k units. LCV dispatches dipped only 32% MoM to 868 units.

* Mahindra & Mahindra’s (M&M) PV volumes reported 56% MoM drop to ~8k units with the UV segment declining 57% MoM to ~7.7k units. UV segment growth remains below potential due to chip shortages. Key models (e.g. Thar) continue to remain on long waiting periods.

* Tata Motors’ volumes saw a lower decline (vis-à-vis peers) of 40% MoM at ~15.2k units, after having aligned sales to retails in Apr’21 (which slipped due to lockdowns). Upcoming launch of compact SUV HBX is likely to further boost volumes.

* Hyundai posted 49% MoM dip in domestic volumes at ~25k units while exports too slipped ~44% MoM to ~5.7k units.

Our view:

OEMs are facing increased channel inventory across categories (I-Sec: >4 weeks) due to weak offtake of retail demand due to covid-induced lockdowns. Jun’21 is likely to be challenging from a production planning perspective as consumer sentiment remains soft owing to both covid and increased vehicle prices (up ~3-8% across segments since Jan’21). Restart of various plants have been on a single shift basis as OEMs remain wary of increased stress to channel partners due to soft retails. Faster vaccination could help accelerate consumer sentiment revival in the urban markets.

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