Automobiles Sector Outlook - To Fire On All Cylinders; Gearing Up For The Festive Demand: Motilal Oswal

Motilal Oswal Report

Our interactions with the leading channel partners indicate a sustained recovery in domestic two-wheeler demand as the retail is expected to grow 4-5% YoY. This will be fueled by 5-7%/3-5% YoY volume growth in urban/rural.

In commercial vehicles, while fleet utilisation remained weak due to seasonality impact, medium and heavy commercial vehicle retail is expected to grow 4-6% YoY as freight demand is likely to improve post-monsoon owing to the upcoming festive season.

Passenger vehicle retail is likely to jump 5-7% YoY propelled by execution of order backlog and moderating supply chain issues. However, inventory has inched up across geographies and remains on the higher side at 40-45 days in South India while remaining lower in western and central parts at 35-40 days each.

Tractor volumes are expected to grow 3-5% YoY led by healthy reservoir level and favorable crop realisation. However, demand has remained muted in the southern markets.

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