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Retail sales witness marginal uptick on festive onset

In continuation to our monthly series, we are monitoring mobility and retail demand trends as we believe both these data sets have a lead-lag effect. Key takeaways from Oct’21: a) India mobility data witnessed MoM improvement as transit and workplace mobility remain flat YoY amid schools and workplaces opening up (e.g. Maharashtra, Uttar Pradesh); global mobility data witnessed improvement in trends across regions post covid (e.g. France, Germany, Japan – charts 1-6); b)

In domestic retail, 2Ws witnessed an encouraging MoM improvement of ~9% with the onset of festive season (e.g. Navratra) even as lack of inventory for popular models (due to semiconductor shortage) is also hurting PV sales (down 2% MoM). c) On commercial side, 3W volumes rose at ~7% MoM with CVs flat. Share of electric PVs/2Ws stood at 0.9%/3% respectively

Key observations

* India’s state-wise retail analysis indicates retail sales improvement in 3W segment on MoM basis (up 7%) as schools resume and workplaces start to open up. With malls and ecommerce booming on festive sales, higher movement of goods has also led to steady freight rates, supporting fleet profitability. Registrations for tractors witnessed seasonal drop of ~17% MoM even as rabi sowing and government procurement improved. Improvement in rural cashflow (aided by both superior winter harvest and rising usage in infrastructure-related haulage activities) is likely to aid demand in H2FY22 (tables 5-9). On EVs, volumes improved (2Ws/PV at ~16%/4% MoM respectively) led by states that have provided additional EV incentives.

* In India, workplace mobility data, after witnessing many ebbs and flows, saw improvement (from <50% in May’21) across most regions. On the positive side, Oct’21 data reflects most regions are close to normalcy with West and East being less impacted while Delhi, Telangana, Karnataka, Chandigarh are down 10-15% YoY. Overall, traffic on aggregate basis dropped marginally by 2% in workplace mobility, while transit mobility was up 7% YoY with South being the most affected (charts 7-10).

* Observations on OEM-wise YTD market share trends: 1) In PV segment, market share losses for Maruti Suzuki (610bps YoY on YTD basis / 216bps MoM) continued, while M&M (94bps) and Tata Motors (238bps) were the beneficiaries due to their new product successes. 2) In 2W space, HMSI lost ground in market share (down 107bps YoY), while Hero Motocorp gained 78bps likely due to higher entry-level motorcycle demand. 3) In EVs, Tata Motors commands a lion’s share of 80% in PVs – while in 2Ws Hero Electric (33% share) surpassed 6.4k units in Oct’21. 4) Tractor segment also witnessed growth with Mahindra and Eicher Tractors making modest gains (up 72bps / 54bps MoM respectively) at the expense of Escorts.

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