Automobiles & Components Sector Update : Weak trends persist by Kotak Institutional Equities
Weak trends persist
The auto sector reported weak prints across domestic PV, CV and 2W segments amid muted retail trends. The tractor segment witnessed a high single-digit yoy growth amid positive farm sentiment with expectations of a normal monsoon. PV, 2W and CV segments witnessed low-to-mid-singledigit yoy increases in retail demand, whereas wholesale numbers witnessed inventory correction. The export segment remained strong, especially across 2Ws and PVs. MM, TVS and EIM reported strong growth in June 2025.
Domestic wholesale PV volumes declined on a yoy basis in June 2025
According to our estimates, domestic PV industry wholesale volumes were down by mid-to-high single digits on a yoy basis, driven by weak retail trends and inventory correction. Retail PV volumes improved by low single digit yoy in June 2025. MSIL’s volumes declined by 6% yoy, led by 12% yoy decline in the domestic segment and 22% yoy growth in exports. We estimate that MSIL’s wholesale market share stood at ~39% (-100 bps yoy). TTMT volumes declined by 15% yoy, whereas M&M’s PV volumes grew by 18% yoy. HMI reported 12% yoy decline in domestic volumes, whereas Toyota’s domestic volumes grew by 15% yoy.
Domestic 2W wholesale grew by mid-single digit yoy in June 2025
Domestic 2W wholesale volumes grew by mid-single digit, driven by continued momentum in the scooter segment and recovery in the motorcycle segment. Retail sales grew by 5% yoy in June 2025 and EV 2W retail sales increased by >30% yoy in June 2025 due to the lower base of June 2024. HMCL’s volumes increased by 10% yoy, whereas TVSL 2W volumes grew by 19% yoy, driven by 10% yoy growth in domestic volumes and 58% yoy growth in export volumes. Royal Enfield volumes grew by 22% yoy, led by 79% yoy increase in exports and 16% yoy growth in the domestic segment. Bajaj Auto reported 1% yoy increase in total volumes, driven by 18% yoy increase in the export segment.
CV segment volumes remained muted in June 2025
Domestic CV segment wholesale volumes saw a low single-digit decline on a yoy basis, partly on account of AC cabin norms. However, retail trends saw a rebound for goods vehicles (5% yoy) in June 2025, possibly due to pre-buying. TTMT domestic CV volumes declined by 5% yoy, led by (1) 9% yoy decline in SCV cargo & pick-up segment, (2) 17% yoy decline in HCV truck segments and (3) 3% yoy decline in the ILMCV truck segment. AL reported 3% yoy increase in volumes, whereas VECV’s volumes declined by 1% yoy in June 2025.
Domestic tractor segment demand remains steady
According to our estimates, domestic tractor volumes increased by mid-to-high single digit yoy in June 2025. Demand momentum is expected to remain strong, driven by (1) early advancement of above-normal monsoon for kharif sowing and better reservoir levels, (2) sustained government support and (3) favorable terms of trade for the farmer. M&M tractor volumes grew by 13% yoy, whereas Escorts Kubota’s tractor volumes grew by only 2% yoy in June 2025.
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