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Growth moderating for 2Ws and UVs

HMSI closes in on HMCL in domestic 2W ICE

* In Jan’25, 2W ICE volume remained flat YoY, while PV volume grew 1.6% YoY.

* In 2Ws, ICE scooter volume increased 8% YoY in Jan’25, whereas motorcycle sales fell 3% YoY, declining for the third consecutive month. On YTD basis, the motorcycle industry, excluding HMSI, has grown by just 2.6% YoY.

* In domestic 2W ICE, the gap between HMCL and HMSI is just 100bp on YTD basis (just 20bp in Jan’25).

* In the motorcycle segment, growth in the 125cc segment decelerated to 7% in Jan’25, while the 150-250cc segment fell 7% YoY.

* HMSI has outperformed in motorcycles and increased its share by 330bp YoY to 20.2% on YTD basis. In scooters, TVSL has been the biggest gainer, with share gain of 150bp to 24.8%.

* In PVs, growth in UVs has also been decelerating for the last few months, up just 5.9% YoY in Jan’25. Key outperformers in FY25 so far are MM and Toyota, which have gained market share by 140bp and 185bp, respectively, in UVs.

* Our top picks in auto OEMs are MSIL, MM and Hyundai.

ICE 2Ws: HMSI gains share from HMCL and BJAUT, TVSL share is stable

* The domestic 2W industry’s volumes remained largely flat YoY in Jan’25 and have grown by 9.2% on YTD basis.

* The motorcycle segment has grown 7% YoY on YTD basis and the ICE vertical has increased by 14.3% YoY.

* Among OEMs, HMSI has gained share from HMCL and BJAUT in 2W ICE, while TVSL has managed to maintain its share on YTD basis.

Segmental trends:

Motorcycle segment:

* Motorcycle industry declined 3% YoY in Jan’25, falling for the third consecutive month.

* HMSI and RE outperformed industry growth in Jan’25 (up 15%/14%).

* As highlighted above, the domestic motorcycle industry has posted 7% YoY growth on YTD basis.

* Only HMSI has outperformed the industry with 28% YoY growth and has increased its share by 330bp to 20.2%. Excluding HMSI, the industry has posted just 2.6% YoY growth YTD.

* On the other hand, BJAUT has seen the steepest decline in its market share by 165bp to 16.9% YTD. TVSL has lost 70bp share to 9.8%. HMCL has lost 40bp share to 42.6%.

100cc segment:

* The segment continued to underperform the industry, as Jan’25 volume declined 10.6% YoY. Except HMCL, all players posted double-digit declines in Jan’25 volumes.

* Even on YTD basis, this segment has posted just 2.3% YoY growth

* On YTD basis, HMSI (+20%) and HMCL (+3%) have outperformed the 100cc segment.

* As a result, HMSI has seen 100bp share gain to 7.1% and HMCL has seen 70bp share gain to 77.9%.

* On the other hand, BJAUT has lost 140bp share to 9.2% and TVSL has lost 40bp share to 5.9%.

* For HMCL, Splendor continues to be its key growth driver, with 12.3% YoY growth YTD. On the other hand, HF/Passion has posted 7.5%/40% YoY decline in volumes YTD.

* For HMSI, growth in 100cc is being driven by Livo (134% YoY growth) and Dream (+47%). Shine100 has posted just 3% YoY growth YTD.

125cc segment:

* Though the 125cc segment has been the key growth driver in motorcycles, its growth rate moderated to just 7% YoY in Jan’25 (+14.6% YTD).

* HMSI has gained 440bp share to 44.5% in this segment and HMCL has gained 220bp to 19.7%. It is important to highlight that while Xtreme125R has done well, it seems to have also cannibalized its own models in the segment: Glamour sales down 21% YoY and Splendor sales down 25% YoY.

* Market share for BJAUT/TVSL declined by 290bp/380bp to 24.6%/11.2% for YTD.

* For BJAUT, Pulsar125 volumes have declined 5% YoY on YTD basis. After a strong run-up initially, Freedom 125 sales fell to 1,345 units in Jan’25.

150-250cc segment:

* This segment saw a ~7% YoY decline in Jan’25 (up 7.6% YoY on YTD basis).

* In Jan’25, BJAUT sales in this segment were down 21% YoY. Even on YTD basis, sales are down 5% YoY.

* HMSI (+44% YTD) and TVS (+20% YTD) continue to outperform in this segment.

* HMSI and TVSL have gained 550bp/250bp share to 21.8%/23.6%.

* On the other hand, BJAUT has lost 420bp share to 30.6% YTD. While Yamaha has lost 260bp share to 20%, HMCL has lost 70bp share to 3%. In Jan’25, HMCL did not sell any units of Karizma.

>250cc segment:

* In Jan’25, Triumph sales improved YoY to 4k units.

* On the other hand, HMCL’s HD X440 sales declined to 881 units and HMCL’s Maverick sold just 182 units in Jan’25.

Scooters ICE segment

* The segment has clocked 14.3% YoY growth YTD.

* TVSL continues to outperform in this segment. It was the only player to have posted strong double-digit growth (27%) in Jan’25 vs. industry growth of just 8%.

* TVSL has gained the most share in this segment by 150bp to 24.8% YTD.

* Both HMSI and Suzuki have gained ~35bp share each to 47.7%/16.6%.

* On the other hand, HMCL is the only player that has posted 16% YoY decline in scooters. As a result, its market share has now fallen by 190bp YoY to 5.3%.

PV update – UV mix now stands at 64.9%

* PV industry grew by 1.6% YoY in Jan’25 and 1.8% for YTDFY25. ? While UVs have grown 12%, cars have declined 14% on YTD basis. As a result, UVs’ contribution in total PVs has increased to 64.9% so far in FY25.

* In the PV segment, MSIL’s market share has fallen by 70bp YoY to 41%, mainly due to a consistent decline in the passenger car segment, in which MSIL has a higher share.

* Key outperformers this fiscal are MM and Toyota, which have seen their market share rise by 200bp and 150bp, respectively, for YTDFY25.

Car segment:

* The segment declined 5% YoY in Jan’25 and 14.2% YTD.

* In Jan’25, the car industry saw a 5% YoY decline, while MSIL posted 5% YoY growth in cars, driven by a strong push for WagonR (24k units sold in Jan’25).

* On YTD basis, MSIL has gained 410bp share to 66.6%.

* Except Toyota, which has seen a marginal 30bp share gain, all other players have lost to MSIL in this segment.

* Another point to highlight is that VW Virtus is now the market leader in the midsize sedan segment, with Hyundai Verna at the second spot with 28% share. Honda City’s market share in this segment has now fallen to 19%.

UV segment:

* The UV segment continues to outperform, though growth has been decelerating for the last few months, up 6% YoY in Jan’25 and 11.8% YTD.

* Among top gainers, Toyota has gained 190bp share to 9.2% and MM has gained 140bp share to 19.7%. MM’s growth is driven by Scorpio (+23% YoY), XUV 3XO (+74%), Thar (+25%), and XUV 700 (+19%). Further, Thar Roxx volumes stood at 5,303 units for Jan’25, while Thar (3-door) volumes fell to 2,254 units.

* MM’s EV wholesales stood at 1,837 units in Jan’25.

* MSIL has gained about 40bp market share in UVs to 25.8%. MSIL’s growth in this segment is driven by Ertiga (+33% YoY), Fronx (+21%), and Brezza (+13%).

* On the other hand, Hyundai/Kia have lost market share by 70bp/100bp YTD to 14.8%/8.9%. Hyundai Creta has clocked its highest-ever sales of 18,522 units in Jan’25.

* For Kia, its wholesales for new Kyros to dealers stood at 5,546 units, while Sonet sales fell to 7,194 units in Jan’25.

Valuation and view

* After a strong demand seen in 1H for both 2Ws and UVs, growth for both these segments has been moderating after the festive season.

* MSIL is our top pick among auto OEMs as it continues to be a play on the rural recovery with an attractive valuation. We like MM for its healthy demand momentum in both SUVs and tractors for FY25. We also like Hyundai as it appears well aligned to benefit from the industry trends toward UVs.

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