Automobiles Sector Update : February volume print - Divergent trends by Kotak Institutional Equities
February volume print: Divergent trends
The auto sector reported a modest wholesale volume print in PV, CV and 2W segments, led by channel filling, whereas retail demand showed weak trends, with PV/CV volumes declining 9-11% yoy and 2W volumes by 6% yoy in February 2025. PV segment wholesale volumes grew in low-single digits yoy, whereas 2W and CV segment wholesale volumes witnessed a decline yoy. The tractor segment continued its uptrend, with low-teens yoy growth in February 2025.
Domestic wholesale PV volumes grow in low-single digits yoy in February 2025
Based on our estimates, domestic PV industry wholesale volumes grew in low-single digits yoy, driven by channel filling, whereas retail sales of the PV industry declined ~11% yoy in February 2025, driven by weak consumer sentiment. MSIL’s volumes improved by 0.9% yoy, led by 3.3% yoy growth in domestic and a 13.5% yoy decline in export volumes. Based on our estimates, MSIL’s wholesale market share stood at ~42.5% (down 60 bps yoy). TTML’s PV volumes fell 8.8% yoy, whereas M&M’s PV volumes grew 19% yoy in February 2025. HMI reported a 3% yoy decline and Toyota’s volumes grew 13% yoy in February 2025.
Domestic 2W wholesales see high-single-digit decline yoy
Domestic 2W wholesale volumes decreased in high-single digits yoy due to a moderation in demand after the festive season, in line with the domestic ICE retail demand trends, with a 6% yoy decline in February 2025. EV 2W retail sales improved 9% yoy in February 2025. Export volumes remained flat on a sequential basis. HMCL’s volumes declined 17% yoy, whereas TVSL’s 2W volumes grew 10% yoy, driven by >25% yoy growth in export volumes and 3% yoy growth in the domestic segment. Royal Enfield’s volumes grew 19% yoy, led by a 23% yoy increase in exports and 19% yoy growth in the domestic segment. BJAUT 2W volumes rose 2% yoy, led by a 24% yoy increase in export volumes, partly offset by 14% yoy decline in domestic volumes.
CV segment volumes remain muted
Domestic CV segment volumes declined in mid-single digits yoy due to weak demand trends across most segments. TTMT domestic CV volumes declined 8% yoy, led by: (1) a 2-7% yoy decline in HCV trucks and SCV cargo and pick-up segments; and (2) a 7% yoy decline in the bus segment, partly offset by 11% yoy growth in the ILMCV truck segment. AL reported 2% yoy growth in volumes, whereas VECV’s volumes rose 9% yoy in February 2025.
Domestic tractor segment demand remains strong
Based on our estimates, domestic tractor volumes increased in mid-teens yoy in February 2025, driven by (1) a strong rabi sowing, aided by higher water storage levels in major reservoirs; and (2) sustained government support. M&M tractor volumes grew 18% yoy, whereas Escorts Kubota’s tractor volumes increased 11% yoy in February 2025.
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