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Apr-23 was highlighted by sustained strength in urban-focused domestic 2Ws (TVSL, EIM), even as underlying trends for the overall 2W industry (incl. rural demand) continue to suggest turning of demand at the margin (refer Valuations attractive amid growth revival; prefer TVSL, EIM). HMCL, while reporting a ~3% dip in domestic dispatches, witnessed higher retails than wholesales and ~12% yoy growth over Mar-Apr combined. Exports remained affected across 2W players, with a ~38-50% YoY decline.

* Absolute E-2W industry retails declined ~23% MoM to 66.4k units, with penetration slipping by ~60bps MoM to 5.4%; share of national/established players was at ~68% vs. 49% in Apr-22.

* As per MSIL (refer link), domestic PV industry wholesales grew ~13% YoY vs. a modest ~3% retail growth, resulting in addition of ~50k units to industry dealer inventory (now at ~3.5 weeks of sales). MSIL’s product mix, though, significantly improved, with UV share at ~23% in Apr-23 vs. ~20.6% in Q4FY23.

* M&HCV volumes declined for TTMT and growth slowed for AL, showing industry moderation amid several quarters of outperformance, thus weakening the macro outlook.

* 2W wholesales for urban-focused players (TVSL, RE) grew by ~28-29% YoY; however, overall industry growth was modest at ~4% given: a) relative rural weakness and b) 38-50% decline in exports. While industry retails (as per Vahan) declined 7% YoY for the month, on normalized basis (Mar-23 and Apr-23 together, to account for the early festive season this year and OBD-II related pre-buy), absolute retails are positive YoY across players (incl. 12% growth for HMCL) – indicating sustained improvement in underlying momentum.

* PV wholesales lead retails; rural outperformance narrows: PV retails (as per Vahan) declined ~4% YoY (vs. 20% growth in FY23). MSIL attributed relatively weaker retails to the pre-buy related impact, festive-related bump in Mar-23, and unseasonal rains, with outperformance of rural retails vs. urban retails also narrowing in Apr-23. Among OEMs, domestic wholesales growth stood at 54% for MM, 13% for TTMT and 10.5% for MSIL.

Domestic CV industry wholesales turned negative (est. ~7% de-growth YoY), amid slowing momentum in M&HCVs (given strong performance since several quarters) and ongoing weakness in the ILCV/SCV portfolio. On a YoY basis, domestic volumes grew 29% for EIMVECV, 16% for MM, and 10% for AL, while declining by 27% for TTMT.

M&M/Escorts domestic volumes witnessed 10%/5% YoY de-growth, on preponing of festivals (in March this year vs. April last year) and unseasonal rainfall. However, companies remain confident of growth in coming months, supported by positive sentiment, strong crop procurement, and healthy water reservoir levels.

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