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Auto sales maintained the trends, with PV and 2W maintaining a positive run, whereas CV and tractor segment sales momentum continued to be weak.  PV segment volumes witnessed a low double-digit improvement yoy in February 2024. Domestic 2W wholesale volumes witnessed >20% yoy growth, driven by a recovery in the rural segment, which came in marginally above our expectations. CV segment volumes declined in the low single digits yoy, whereas tractor volumes declined in the high teens.

Domestic PV wholesale volumes grew in low double-digits yoy in February 2024

Based on our estimates, domestic PV industry wholesale volumes increased in the low double digits yoy, driven by steady demand trends and channel filling, whereas retail sales grew in the high single digits during the month. MSIL’s domestic volumes rose 9% yoy in February 2024, led by strong growth in the SUV segment, partly offset by a decline in hatchback and sedan segment volumes. As per our estimates, Maruti Suzuki’s wholesales market share stood at ~42.8% (-120 bps yoy). Tata Motors reported a 19% yoy improvement in PV volumes, whereas M&M’s volumes increased by 40% yoy in February 2024. Hyundai Motors reports 7% yoy growth, whereas Toyota witnessed strong growth of 52% yoy in February 2024.

Domestic 2W wholesale volumes grew >20% in February 2024

Domestic 2W wholesale segment volumes came in marginally above our expectations, with growth of >20% yoy. Growth in the domestic market was driven by steady demand trends and a favorable base. Exports demand trends improved and witnessed a sharp improvement in volumes mom, especially for TVS Motors. HMCL’s volumes increased 19% yoy, whereas TVS Motors reported a 33% yoy increase in volumes, driven by a strong uptick in the export segment. Royal Enfield’s volumes improved 6% yoy, driven by a 5% yoy increase in domestic volumes and a 13% increase in export volumes. Bajaj Auto reported a 25% yoy increase in two-wheeler volumes in February 2024.

CV segment volumes came in line with our expectations

Domestic CV segment volumes declined in the low single digits yoy, which came in line with our expectations. Tata Motors’ domestic CV volumes declined by 4% yoy, led by a 12% yoy decline in the M&HCV trucks and (2) a 4% yoy decline in SCV cargo segment, partly offset by a 29% yoy increase in the bus segment. Ashok Leyland reported a 6% yoy decline in volumes in February 2024. However, VECV reported a 2% yoy improvement in CV segment volumes in February 2024.

Weak rural sentiment continues to impact demand for domestic tractor volumes

Based on our estimates, domestic tractor industry volumes saw a high-teen decline yoy, owing to the tapering of agriculture activities led by: (1) weakness in southern and western markets due to diminished kharif output and (2) lower rabi sowing. However, improved rabi sowing and a normal monsoon forecast for next year should support demand recovery in the coming months. M&M/ Escorts’ total tractor volumes declined 16%/17% yoy in February 2024.

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