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Some trend reversal visible in recent months

Outperformers: HMSI in 2Ws, MM in PVs, and VECV/MM in CVs

* We have analyzed volume data for Dec’24 and YTDFY25 for all segments. The 2W ICE segment has outperformed on YTD basis, though the trend has reversed in Dec’24 and 3QFY25. 2W growth (3%) has marginally trailed PV growth (4%) in 3Q. In fact, in Dec’24, 2W sales declined 10.8% YoY, whereas PV sales grew 10% YoY.

* Within 2Ws, the ICE scooter segment has posted 15% YoY growth YTD and the motorcycle segment has seen ~8% YoY growth. HMSI has outperformed in both 2W ICE scooter/motorcycle segments, increasing its market share by 90bp/335bp YoY to 48.4%/20% YTD, respectively.

* PVs has seen a modest 1.8% growth YoY on YTDFY25 basis. UVs continue to outperform, with their contribution to PVs now increasing to 65.3%. Key outperformers this fiscal are MM and Toyota, which have gained market share by 200bp and 165bp, respectively, for YTDFY25 in PVs.

* In CVs, VECV has outperformed in MHCV goods segment, while MM has outperformed in LCV goods on YTD basis.

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

HMSI – the only player to have gained share in domestic ICE 2Ws

* Domestic 2W ICE volumes declined 10.8% YoY in Dec’24, but they have increased by 10% YTD.

* While the motorcycle segment has grown 8% YoY for YTD, ICE scooter volumes have grown 15% YoY.

Segmental trends:

Motorcycle segment:

* As highlighted above, the domestic motorcycle industry has posted 8% YoY growth YTD.

* HMSI has been the only player to have gained share in motorcycles, up 335bp to 20% on YTD basis.

* BJAUT has lost the most share by 160bp to 17%. 100cc segment:

* The segment continues to underperform the industry and has posted 3.6% YoY growth so far in FY25.

* Despite its high share, HMCL has done well to further gain 60bp share to 77.6% in this segment.

* The only other player to have gained in this segment is HMSI: +125bp to 7.2%.

* While BJAUT has lost 150bp share to 9.3%, TVSL has lost 40bp share to 5.9%.

* For HMCL, Splendor continues to be its key growth driver, with 13.5% YoY growth YTD. On the other hand, HF/Passion have posted 6%/38% YoY decline in volumes.

* The key highlight for HMSI in this segment is that unlike the popular perception, growth in the 100cc segment has been driven by Dream (+63% YoY) and Livo (+148% YoY). Its Shine 100 saw just 6% YoY growth.

125cc segment:

* The segment continues to be the key growth driver of the motorcycle industry and has posted 15% YoY growth so far in FY25.

* In this segment, HMSI has gained 420bp share to 43.7%.

* Even HMCL has outperformed this segment on the back of healthy demand for its Xtreme125R. HMCL has gained 190bp share to 20.1%. 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 20% YoY and Super Splendor sales down 26% YoY on YTD basis.

* Market share for BJAUT/TVSL declined by 260bp/350bp to 24.9%/11.3% for YTD.

* BJAUT seems to have discontinued CT125. Its growth in this segment has been primarily driven by incremental volumes of Freedom 125 (sold ~71k units YTD, but only 4173 units in Dec24). However, Pulsar125 volumes have declined 3.7% YoY for YTD.

150-250cc segment:

* This segment has posted 9.4% YoY growth on YTD basis.

* Here again, HMSI has significantly outperformed the segment and has gained 550bp share to 21.9%.

* TVSL has also done well with 21% YoY growth YTD and has gained 230bp share to 23.6%.

* On the other hand, segment leader BJAUT has underperformed the industry and has lost 400bp share to 30.5%.

* Despite its new launches, HMCL continues to post weak numbers. It has lost 70bp share to 3% on YTD basis.

Scooters ICE segment

* The segment has posted 15% YoY growth on YTD basis.

* While TVSL has gained over 110bp share to 24.3%, HMSI has gained 90bp share to 48.4%. Even Suzuki has gained 40bp share to 16.4%.

* The recently launched upgrade of TVS Jupiter has been well accepted by customers and is driving market share gains for the company. The new Jupiter is seeing such a strong demand that TVSL sold 88.7k units of this model in Dec’24.

* HMCL continues to underperform and has lost 210bp share to 5.2%.

PV update – UV mix further rises to 65.3%

* PV industry grew by 10% YoY in Dec’24 and 1.8% in YTDFY25.

* UV contribution has now increased to 65.3% so far in FY25.

* MSIL’s market share has fallen by 90bp YoY to 40.6%, mainly due to a consistent fall in the passenger car segment, in which MSIL has a significantly high share.

* Key outperformers this fiscal are MM and Toyota, which have seen their market share rise by 200bp and 165bp, respectively, for YTDFY25. TTMT/Hyundai recorded a decline of 42/56bp to 13.3%/ 14.2%. Car segment:

* The segment grew 7% YoY in Dec’24 but has declined 15% YTDFY25.

* All players have posted volume decline on YTD basis

* MSIL continued to strengthen its position in the segment and has gained 370bp share to 66%, Toyota has also gained 40bp share to 3.9%.

* An interesting fact to highlight is that in the mid-size sedan segment, VW Virtus is now the market leader with 38.3% market share on YTD basis.

UV segment:

* The UV segment continues to outperform with 12.6% YoY growth on YTD basis.

* Among top gainers, Toyota has gained about 200bp share to 9.3% and MM has gained 130bp share to 19.6%. MM’s growth is driven by Scorpio (+25.6% YoY), XUV 3XO (+71%), Thar (+25%) and XUV 700 (+19%).

* MSIL has also gained 50bp share in UVs to 25.8%, driven by Ertiga (+39% YoY), Fronx (+23%), and Brezza (+15%).

* For Kia Motors, Sonet has grown 49% YoY, while Seltos is down 33% YoY on YTD basis.

* For TTMT, Punch remains its growth driver with 28% YoY growth on YTD basis. However, Nexon volumes are down 8% YoY on YTD basis. Tata Curvv has so far sold 23,664 units since its launch in Sep’24.

* For Hyundai, its growth drivers include Exter (+28% YoY) and Creta (+20% YoY).

* For Toyota, its strong growth has been driven by incremental volumes from Taisor, Rumion, Urban Cruiser Hyryder and Innova Hycross. Surprisingly, Innova Crysta has posted 3% YoY decline on YTD basis, indicating a shift in customer preference toward Hycross.

* On the other hand, Hyundai/Kia have lost market share by 75bp/115bp YTD to 14.8%/8.8%.

CV update – Domestic CV volumes down 2% YoY on YTD basis

* In the goods category, the MHCV goods segment is down 6.6% YoY on YTD basis and the LCV goods segment is down 2.9% YoY.

* In the passenger segment, MHCV bus volumes have grown 32.5% YoY, while LCV buses are flat on YTD basis.

MHCV goods:

* As highlighted above, the MHCV goods segment has posted 6.6% YoY decline on YTD basis.

* VECV has outperformed the industry and gained nearly 100bp share to 17%.

* While AL has lost 55bp share to 30%, TTMT has marginally lost share (50%).

LCV goods:

* This segment has posted about 3% YoY decline on YTD basis.

* In this segment, MM has gained about 200bp share to 49% from TTMT (-245bp to 30%).

* Even MSIL has gained 60bp share to 7% on YTD basis.

Bus segment:

* In the passenger segment, the MHCV segment has posted 32.5% YoY growth, whereas LCV bus volumes are flat on YTD basis.

* In MHCV buses, TTMT has gained 600bp share to 34% from other large peers.

* In LCV buses, TTMT has lost 600bp share to 25%, while Force Motors has gained 300bp share to 49%.

Valuation and view

* While the 2W segment has outperformed PVs so far in FY25, we expect its growth to moderate for the rest of the year.

* MSIL is our top pick among auto OEMs as it continues to be a play on the rural recovery with 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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