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Wholesales down as lockdowns impact sentiment

Two-wheeler (2W): Premium motorcycles, scooters grow ahead of entry segment

* Hero MotoCorp (Hero) has reported sales of ~372k units, down 35% MoM. Motorcycle segment dropped by a similar 35% MoM while the scooter segment declined ~37% MoM.

* Royal Enfield has reported 19% MoM drop to 53.3k units with new product launches (e.g. Meteor) supporting volume growth. Exports reported 23% MoM slump to 4.5k units.

Passenger vehicles (PVs): UV sales continues to drive industry growth

* Maruti Suzuki (Maruti) dispatches reported a marginal 4% MoM decline at ~160k units due to strong exports performance (up 49% MoM at 17.2k units). Mini-vehicle segment clocked 2% MoM growth at ~25k units while the compact segment fell 12% MoM to 72k units. UV segment despatches declined 3% MoM at 25.4k units. Dispatches to Toyota witnessed a modest decline (down 10% MoM) at 5.3k units. Domestic sales (ex-commercial & Toyota despatches) were down 7% MoM at 136k units. LCV despatches slumped 62% MoM to 1,272 units.

* Mahindra & Mahindra’s (M&M) volumes reported 9% MoM growth to 18.3k units with the UV segment growing 9% MoM to 18.2k 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’ Apr’21 volumes saw a drop of 15% MoM at 25k units, after having aligned sales to retails (which slipped due to lockdowns). New 7-seater premium SUV Safari is likely to further boost volumes, product mix.

* Hyundai posted 8% MoM drop in domestic volumes at 59.2k units while exports dropped 15% MoM to 10.2k units. New 7-seater SUV launch Alcazar has received favourable customer feedback.

* Kia Motors has reported 16% MoM drop to ~19.1k units in domestic sales. The recently launched compact SUV Sonet continues to drive sales momentum; however, new competition in the SUV space continues to limit sales increase.

* MG Motors’ sales dropped 54% MoM as recently launched Hector refresh and the recently launched Gloster grew steadily to reach an al-time high sales at 5k units in Mar’21.

* Toyota’s domestic volumes were down 36% MoM to ~9.6k units. Launch of Urban Cruiser compact SUV (rebadged version of Maruti Brezza SUV) in Sep’20 has aided sales growth.

* Honda cars reported a 28% MoM growth in domestic sales at ~9.1k units

Our view:

OEMs maintained dispatches in Feb/Mar’21 to create incremental buffer in the channel for the upcoming wedding season (Apr’21 onwards). However, the increase in vehicle prices in Jan’21/Apr’21 in wake of higher input prices as well as the imposed intermittent lockdowns across states could pose a challenge going ahead (visible in weakening retail demand trends). The scheduled shutdowns for 1-2 weeks by leading OEMs is also likely to impact wholesales in May’21, could provide readjustment time for channel partners. Faster vaccination of population could help improve consumer sentiment faster in urban markets for a few segments (e.g. SUVs, scooters, 3Ws).

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