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Muted end to CY2023

Overall, wholesale volume growth across segments came in below our expectations in December 2023. Domestic 2W wholesale volumes witnessed low double-digit yoy growth, driven by recovery in the rural segment and wedding season. Recovery in the export 2W segment remains muted. The CV segment’s volumes declined in low single digits yoy, whereas tractor volumes declined mid-teens due to weak rural sentiment. The PV segment’s volumes witnessed mid-single-digit improvement yoy.

Domestic PV wholesale volumes grew mid-single digits yoy

According to our estimates, the domestic PV industry’s wholesale volumes increased mid-single digits yoy and retail volume improved 1% yoy in December 2023. Wholesale volume growth was driven by an uptick in volumes of Toyota, M&M and Hyundai Motor yoy. MSIL’s total volumes declined 1% yoy in December 2023, led by continued weakness in the hatchback/sedan segments, partly offset by strong growth in the SUV segment. According to our estimates, Maruti Suzuki’s wholesale market share stood at ~36% ((-)400 bps mom), whereas the retail market share declined 50 bps mom. Tata Motors reported an 8% yoy improvement in PV volumes, whereas M&M’s volumes increased 24% yoy in December 2023.

Domestic 2W wholesale volumes grew low double digits in January 2023

The domestic 2W wholesale segment’s volumes were below our expectations, with growth in low double digits yoy. Growth in the domestic market was driven by a recovery in the replacement segment’s demand and strong demand during wedding days. Exports demand recovery remained muted sequentially. HMCL’s volumes remained flat yoy in December 2023. TVS Motors reported a 28% yoy increase in volumes, led by 19-51% yoy growth in motorcycles, scooters and mopeds. Royal Enfield’s volumes declined 7% yoy, driven by a 4% decline in domestic volumes and 29% decline in export volumes. Bajaj Auto reported a 15% yoy increase in overall volumes.

CV segment’s volumes came in below our expectations

The domestic CV segment’s volumes declined low single digits yoy, which came in below our expectations. Sequential recovery came in below expectations, as we were expecting a demand pick-up from the states that had elections in the previous month. Tata Motors’ domestic CV volumes declined 1% yoy, led by a 14% yoy decline in the SCV cargo segment, partly offset by (1) 8-14% yoy increase in the I&LCV and bus segments and (2) 10% yoy increase in the M&HCV segment. AL reported a 16% yoy decline in volumes in December 2023.

Weak rural sentiment marred demand for domestic tractors

According to our estimates, the domestic tractor industry’s volumes saw a mid-teen decline yoy due to tapering of agriculture activities, led by (1) delayed harvesting season and (2) lower Rabi sowing. Announcement of higher horticulture production and government support will support demand recovery. M&M and Escorts’ total tractor volumes fell 18-19% yoy in December 2023.

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