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2Ws, SUVs shine in FY 24; Tractors decline the most…

The month of March was a mixed bag for the auto sector as 2Ws like Bajaj and TVS have excelled, while Hero has underperformed despite being in the same sector. On the other hand, MSIL has posted growth of 10%, while M&M’s Auto segment has posted 3.5% growth. Tractors have fallen by and large around 20% average, while CVs have fallen around 6-11%. Exports seem to have bounced back in March with a strong 40% and 25% growth for Bajaj and TVS 2Ws respectively. When we analyse the performance on full year basis, we see that 2Ws and SUVs have been the best performers. CVs have declined between 0-6% which was slightly better than our expectations, while tractors have fallen by 7-8% in line with anticipation. PVs have reported higher single digit growth. Improvement in sentiments, absorption of price hikes, new model launches and slow and steady revival of rural markets has led to robust growth in 2Ws, while the SUVs drove a decent growth in PVs. Electrification and premiumization also remain the main factors for growth in 2Ws. As far as CVs and tractors are concerned, high base has become one of the biggest issues along with slowdown in capex and rural growth. We witnessed both Ashok Leyland and Tata Motors posting declines yoy, while on a sequential basis, they showed a good growth. Weak monsoons and unseasonal rains have added to woos of tractors, which led to low crop output, while weak Rabi sowing triggered tractor down cycle further

Company wise performance

Among the PV OEMs, MSIL has posted 1.87 lakh units in March, growing by 10%, while in FY 24, it posted 2.13 mn sales, a growth of 8.6%, driven totally by SUV business, wherein the company has gained #1 spot. SUV (36% of domestic sales in FY24 v/s 22% in FY23) positivity more than offset the deceleration in the small and hatch back car segment (54% v/s 67% yoy). The compact car segment de-grew by 4.1% in FY24. The SUV segment continued its splendid run at 75% in FY24. Small car segment continued to be the spot of worry as it fell by 39% during the fiscal. TaMo’s PV segment saw a 14% yoy growth and 2.3% mom de-growth in March, while growing by 6% in FY24. M&M’s SUV segment on the other hand, continued its strong run and jumped by 12.9% yoy and fell by 4.2% mom in the month. FY sales of SUV segment zoomed by 29%. CV division was down by 6.1% yoy and showed a decline of 8.3% mom. In FY 24, the CV division surprisingly grew by 5.7% mainly driven by >3.5T segment which is posting splendid performance. For Ashok Leyland as well MHCV sales declined by 7.2% yoy and grew by a huge 37% mom. On FY basis, it grew flattish which is a positive sign. LCVs posted 2.1% yoy and 19.8% mom hike, while total sales of Ashok Leyland reduced by 4.4% yoy while growing by 31% mom. M&M’s tractor business in the domestic markets de-grew by 20.7% mom and 27.8% yoy, while in FY 24, it dropped by 6.4%. Escorts Kubota also showed a similar trend as domestic tractor sales grew by 33% mom while reduced by 16% yoy. FY drop was 5.3%. VST Tillers compact tractors segment plummeted by 12% yoy, while grew by 92% mom. Tiller growth was at 8% mom, while dropping by 27% yoy. FY sales were down by 7.2%. 2W sector has been the outperformer in the industry for a while now. In 2W segment Bajaj reported a growth of 20.2% yoy and 7.3% mom for its domestic motorcycles, while exports motorcycles rose by a meaningful 38% yoy and 5.4% mom. The sequential growth is a positive sign indicating exports may have bottomed out.