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Emkay Global Financial Services conducted a channel check to gauge the volumes’ estimate for the month of May. The channel checks indicate the recovery in the 2-wheeler space to continue as the entry/rural segment supplements the premium/urban categories on uptick in replacement demand. PVs will see an uptrend in the month of May. Overall volume growth to endure, except in CVs and Tractors.The volumes for CVs are expected to be subdued, on pre-buy in the past months.

Maruti Suzuki expects SUVs to drive market-share gains in FY24 & thereafter: Riding on its strong SUV suite (new Brezza, Grand Vitara, Fronx and the upcoming Jimny – slated for a 7-Jun23 launch), Maruti  expects to outperform the underlying 5-7% industry growth in FY24; also, it aims to capture market leadership in SUVs with ~25% share in the space (now ~43% of industry volumes), towards its ambition of regaining overall market share.

Commercial Vehicles

M&HCV retails are up ~10% YoY for May-23E, with Ashok Leyland outperforming Tata Motors on an overall basis. Emkay Global expect a 12%/17% wholesale volume decline YoY for Ashok Leyland/Tata Motors, respectively. Escorts’and M&M’s tractor volumes are likely to decline 2-3% YoY. Retail growth stands at ~5% YoY in May-23E for the industry vs. double-digit growth for FY23.

Two-wheelers

Emkay Global expects domestic volumes to improve 72% for Bajaj Auto (on a low base), 25% for TVS Motor, 30% for Eicher Motor-Royal Enfield, and ~5% for Hero Moto Corp Ltd. The market leader Hero Moto’s retail volume (as per Vahan) is up ~11% YoY on MTD basis (vs. ~4% industry growth), taking cue from the ~12% growth over March-April 2023 (combined). Overall volume is expected at 75,000 for Royal Enfield (~18% YoY), 2,85,000 for Bajaj Auto (~14% YoY), 3,05,000 for TVS Motor Ltd (~6% YoY) and 5 lakh for Hero Moto (~3% YoY). The OEM commentary in the just-concluded earnings season has turned constructive, with Bajaj Auto guiding to 6-8% industry growth in FY24 (including recovery in the 100cc segment) and Hero Moto reiterating its guidance of double-digit industry revenue growth this year. Sequential uptick in 2-Wheeler exports is seen continuing; large volume players like Bajaj Auto and TVS Motor Ltd have indicated that exports have bottomed out, with bulk of the inventory correction phase now behind and further strengthening seen H2 onwards.

Passenger Vehicles

In PVs, Emkay Global expect Maruti Suzuki to outperform even as semiconductor shortages continue to impact production. The research house estimates total volume growth of ~10% YoY for Maruti Suzuki (178K units). Domestic volume growth stood at ~30% YoY for M&M (on a low base; ~35k units), while Tata Motors volumes are expected to grow ~4% YoY (~45k units). Maruti Suzuki has highlighted that it expects the production loss to persist in the current quarter, with some improvement likely from July 2023; also, M&M has intimated of a ~10-12% production impact from short semiconductor supplies.

Blended absolute vehicle discounts (Exhibit 20) have been on an increasing trend, albeit much below the earlier peaks, when considered as a proportion of the ASP.

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