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Dec’23: 2Ws and CV wholesales grow YoY

PVs remain flat YoY as entry-level segment remains a drag; tractors decline HMCL and AL are yet to declare their wholesales numbers. Dec’23 overall dispatches across the segments came in lower than expected, except for CVs. 2W domestic dispatches grew 24% YoY, while exports improved 5% YoY. In PVs, despite a strong growth of 15% YoY for UVs, overall PVs remained flat YoY due to sluggishness in the entry level segment. CV volumes grew 6% YoY, led by 11.5% YoY growth in MHCVs. Tractors declined 18% YoY. We believe 2W demand should continue to grow in the coming months. CV demand growth is expected to moderate in 4Q due to the high base effect. Tractor wholesales remained weak, but we are seeing greenshoots in retail growth as we highlighted in our channel check note.

? 2W dispatches, excluding HMCL, grew 17% YoY (below est.): Overall 2W dispatches came in below our estimate, due to lower-than-expected volumes for RE/BJAUT. TVSL reported in-line volumes. Wholesales for BJAUT/TVSL grew 15%/27% YoY but declined 7% YoY for RE. Domestic dispatches grew strongly by 24% YoY, while exports rose 5% YoY. Interacting with the media, BJAUT’s Executive Director, Rakesh Sharma, said, “Domestic wholesales for the company in Dec’23 were better than expected post festival months of Oct/Nov’23 due to its strategy to focus on the top half of the industry, where it outpaced the industry by 2x. Newer business like Chetak and Triumph are scaling well. Dec’23 retails were almost equal to the festive period Nov’23 retails. Overall exports showed a slight improvement when compared to 2Q. However, exports to LatAm and Africa were slightly affected due to the disruptions in the Red Sea but this issue is temporary and there was no loss of wholesales due to this but slight delay.” He expects 4Q exports to be better than 3Q amid improvements in global macros. We believe 2W domestic wholesales will continue to grow, aided by the ongoing marriage season and a gradual recovery in rural markets.

? PV dispatches remained flat YoY (below est.); UVs grew 15% YoY: Volumes for MSIL came in at 137.5k units (flat YoY), while TTMT grew 8% YoY to ~43.7k units. MM UVs (incl pickups) grew 3.5% YoY to 52.5k units. TTMT saw Vahan registration growth of 14% YoY (vs. wholesales growth of 5% YoY), which indicates its focus on retails, thus reducing channel stock sharply. MM faced supply-side challenges, which restricted its wholesale volume growth. We believe UVs will continue to see sustained growth, while entry-level PVs will see a decline, denting overall PV growth.

? CV dispatches, excluding AL, grew 6% YoY (above est.): MHCV volumes grew ~11.5% YoY, whereas LCV volumes remained flat YoY. TTMT volumes remained flat YoY, while VECV volumes grew 11% YoY. TTMT volume growth remained muted in 3Q due to the higher base effect, impact of state elections, and postfestive seasonal slowdown in rural consumption. We believe CV demand growth will moderate in 4Q due to the high base effect. However, given macro tailwinds, we believe fundamental demand will remain intact, resulting in a rebound in FY25.

? Tractor dispatches declined 18% YoY (below est.): MM/ESC volumes declined 18%/19% YoY. As per M&M, “Retail momentum slowed down on account of tapering of agricultural activities, which is the norm in the month of December. Announcement of higher horticulture production and continued Government

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