Financial year 2025 was a tough one for automakers. While two-wheeler companies started off the year with double digit growth in the first half, it quickly waned in the second half to a moderate 6-8% growth.
Passenger cars and commercial vehicles had a torrid year and March isn’t expected to be very different for the segments. Tractor sales have made a strong revival in last few months, benefitting from positive rural prospects. This is due to good reservoir levels and improvement in crop prices continue to support demand.
While Tata Motors Ltd., Hero and Bajaj Auto Ltd. would be key draggers this month, Eicher Motors Ltd., Mahindra & Mahindra Ltd. and TVS Motor Co. would continue their growth momentum.
Two Wheelers: Export Growth To Be Key Differentiator
After a strong start to FY25, the growth slowed down for two-wheeler makers. While the listed players grew sales in double digit in the first half of fiscal 2025, post the festive season, momentum hasn't continued.
In northern states such as Uttar Pradesh and Bihar, volume growth will be affected by last year’s high base, driven by the early start of the marriage season, according to Motilal Oswal Financial Services Ltd. According to its channel checks, dealers are hopeful of a demand revival, given favourable agricultural sentiment and the start of the marriage season, particularly in North India.
Eicher Motors is expected to report the strongest growth this month, with over 23% growth expected in March. The company has changed its strategy post second quarter earnings to focus on sales, rather than Ebitda margins. Their sales have grown by 8.4% in the first 11 months — the second highest after TVS.
TVS will continue to see low double digit growth in March, led by growth in scooter segment along with strong export market growth.
PV: High Discounts, Inventory Put Pressure On Sales
Mahindra has outperformed the larger passenger car industry growth by a mile and while the growth has lowered to low double digits in last few months, its still outpacing the industry.
The PV segment has seen discounts remain elevated across OEMs, particularly at the dealer level, with average price discounts nearly 75-80% higher YoY, according to Motilal Oswal. Inventory levels have risen sharply for Maruti Suzuki dealers, increasing from one-two weeks in January 2025 to five-six weeks currently. Maruti, while matching the industry growth of 5-6%, has seen its SUV portfolio largely supporting sales.
Tata Motors and Hyundai India have had a disappointing FY25 and that will end with the same disappointment in March. Tata Motors has reported a 3.5% fall in sales in first 11 months of FY25.
Nomura, though, expects some improvement towards month-end led by: earlier Navratri festival from March 30, 2025 (compared to April 9 in 2024) and pre-buying due to a price hike announced by most OEMs during April 2025.
Commercial Vehicle: Bus Remains In Growth Phase, Trucks Lag
This month is going to be a washout for listed commercial vehicle makers, with flat-to-no growth in March. Demand for buses remains healthy and is expected to grow 1-2% YoY, making it the only category to report YoY growth. But the slow capex in 2024 has hurt truck growth.
Fleet operators were willing to reduce freight rates to deploy idle trucks, keeping demand and supply largely balanced, Motilal said. But this would not lead to incremental sales.
While VECV, the commercial vehicle arm of Eicher Motors, has shown 5% growth in first 11 months of FY25, Ashok Leyland Ltd. has seen no growth. Tata Motors has actually reported a 5% fall in sales.
Tractors: Positive Customer Sentiment
Tractors could potentially show the highest growth this month, led by positive rural prospects, due to good reservoir levels and as improvement in crop prices continues to support demand.
While M&M has grown 10% in tractor sales in first 11 months of FY25, Escorts has been slower with just 1-2% growth in the same time period. Nuvama sees positive customer sentiment, favourable base and inventory build-up at dealers supporting growth this month.
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