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PVs – Improving supplies drives wholesales; Order backlog remains healthy:

In Jul’23, PV OEMs posted healthy volume growth on MoM basis led by improving supply constraints. Order book continues to remain robust led by recent launches. MSIL reported domestic PV wholesales of c.152k units (+6% YoY, +14% MoM). This was led by strong growth in UV segment (+167% YoY, +43% MoM). Export sales for MSIL stood at c.22k units (+9% YoY, +12% MoM). Total volume for MSIL stood at c.182k units (+3% YoY, +14% MoM). M&M reported total PV sales of c.36.2k units (+29% YoY, +11% MoM) led by improving supply constraints. TTMT reported total PV sales of c.47.7k units (flat YoY, +1% MoM) owing to capacity constraints. EV sales for TTMT stood at c.6.3k units (+57% YoY, -10% MoM). Hyundai domestic PV sales stood at c.51k units (flat YoY, +1% MoM). Hyundai’s management indicated that with semiconductor supply issues more or less behind, it remains geared for the upcoming festive season with strong SUV portfolio. MG’s sales stood at c.5k units (+25% YoY, -2% MoM). Toyota reported sales of c.20.7k units (+5% YoY, +14% MoM)

2Ws – domestic performance impacted by seasonality / floods; exports to improve gradually:

Wholesale volume performance for 2W OEMs remained muted in Jul’23 owing to seasonality. In domestic 2W segment, TVSL’s wholesales were flattish MoM. However, BJAUT / HMCL / RE’s wholesales declined by -15% / -12% / -2%, respectively, on MoM basis. On a YoY basis, domestic sales were quite mixed with TVSL / BJAUT / HMCL / RE reporting +16% / -14% / -14% / +42% YoY, resp. HMCL indicated that volumes are reflective of the inclement weather conditions in July, including unprecedented rains and floods in certain parts of the country that resulted in sharp decline in footfalls at dealerships. In case of 2W exports, volumes improved MoM by +12% / flattish / +41% / -27% for TVSL / BJAUT / HMCL / RE respectively. However, they are still below their peak performance owing to issues related to currency unavailability and other macro headwinds in key export geographies. On YoY basis, volumes are higher/lower by -21% / -16% / +35% / -22%, respectively. BJAUT indicated that exports are expected to see gradual recovery going ahead. TVSL reported EV sales of c.13.3k units in Jul’23 (vs. 14.4k in Jun’23). EV sales have been impacted due to recent increase in prices on account of reduction in FAME subsidies. However, order book for iQube remains healthy and the company is confident of continued improvement in sales in the coming months.

CVs – mixed performance:

CV wholesales grew by low single-digit YoY during Jul’23. Fleet operators’ sentiment remains positive based on pick-up in economic activities. Total CV volume for AL / TTMT/ M&M / VECV improved by +12% / -1% / 0% / -1% on YoY basis. In case of AL, MHCV/LCV volumes increased YoY by 19% / -3%. TTMT’s HCV sales grew YoY by +14%. However, its ILMC/SCV volumes declined YoY by 11%/10%. M&M’s LCV sales also declined on YoY basis by 1%. However, VECV posted YoY growth of 2% / flattish in SCVs / MHCVs. Bus volumes continued strong growth momentum. Bus sales for AL / TTMT / VECV grew by +56% / +24% / -8% on YoY basis. Overall sales momentum is expected to remain healthy driven by a) improving fleet operator’s profitability on gradual freight hikes/reduction in CNG price and rising fleet utilization and b) rising Bus orders from State Transportation Undertakings (STUs). CV industry is expected to grow by mid-to-high single digit during FY24.

Tractors – Steady demand despite high base:

Tractor volumes improved YoY by double-digits in Jul’23. M&M’s domestic tractor sales stood at c.24k units (+11% YoY, -44% MoM). Company indicated that monsoon has progressed well during the last week of June aiding kharif sowing (acreage higher than last year). Overall positive sentiments in rural economy are expected to support the demand in the coming months. Escorts reported domestic sales of c.5.2k units (+10% YoY, -44% MoM). Company indicated while flood like situation has impacted on-ground activities in certain pockets, overall monsoon has progressed well during the last 2 month (barring in certain eastern pockets). Overall, it expects retail demand to pick up well in the upcoming festive months starting September.

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