May Auto Sales Preview: Two-Wheelers To See Growth; PV, CV Segment To Stay In Slow Lane
Overall volume for passenger vehicles is expected to be around 7-9%, with heatwaves playing spoilsport among many other factors.
Retail demand for the month of May is expected to remain weak across vehicle categories amid the impact of heatwaves, ongoing Lok Sabha elections and the absence of significant marriage dates this month.
Two-Wheelers: The Only Growth Prospect
Two-wheelers are expected to show growth of 2–4% this month and seem to be the only category to do so. According to Motilal Oswal, the southern states are expected to show better growth than North India.
Although the growth may be lower across companies as compared with the previous month, which had marriage dates and festivals to support two-wheeler growth,
Bajaj Auto Ltd. launched the Pulsar 400cc recently and although the same has yet to reach dealerships, the segment is expected to be a key performer, and the performance of this launch will be monitorable.
TVS Motors Co. is expected to report the highest growth in the two-wheeler space. Dealers are receiving inquiries for the lower-priced iQube, but vehicles are yet to be dispatched by the company.
Hero MotoCorp Ltd., on the other hand, is still on the recovery trend and is expected to decline in growth to low single digits. Supplies of the company’s newest model, the Xtreme 125R, continue to remain low and dealers are unable to get sufficient allocation, according to Motilal Oswal.
Passenger Vehicles: Heatwaves Play Spoilsport
Overall volume for passenger vehicles is expected to be around 7-9%, with heatwaves playing spoilsport among many other factors. Footfalls are down 15% month-on-month due to heatwaves, elections and the absence of marriage dates, among other factors.
Mahindra & Mahindra Ltd. is expected to be an outperformer, showing strong growth of 18% on the back of new launches and achieving higher production as compared with last year. The launch of 3XO, which saw bookings of 50,000 units in just the first hour, saw deliveries start on May 26 and is expected to boost the company’s momentum further.
Tata Motors Ltd. will see mid-single-digit growth this month. According to Motilal Oswal, the M&M 3XO launch has brought back interest in purchasing and requesting lower variants of compact SUVs and is seen to have a small effect on Nexon sales.
Maruti Suzuki India Ltd. saw the launch of the New Swift on May 9 and as per dealers, this is expected to bring 10-15% incremental sales over the old Swift, though demand sustenance is key.
Commercial Vehicles: In The Slow Lane
Demand for commercial vehicles is expected to see an 8–10% decline due to underlying weakness in segments like iron ore extraction, the cement sector, infrastructure, etc. Within CV, bus demand has remained healthy during this month, while large fleet operators are benefiting from higher discounts to the tune of 10–15% of the cost of vehicles, said Motilal Oswal.
Ashok Leyland Ltd. and Tata Motors are expected to report low to mid-single-digit growth for this month, while VE Commercial Vehicles Ltd. is expected to report an 11% fall in sales as compared with last year.
Tractor: Downward Momentum Continues
The space is expected to continue its downward momentum in May as well and is seeing a decline, led by weak agricultural sentiments in key regions. For M&M Tractor and Escorts there is slight degrowth compared to last year but the monthly trend is variable. For M&M we saw 47% growth, aided by festivals of Gudi Padwa and Navratri in April 2024 while Escorts sales fell 11% in April 2024. We see some balancing expected as Escorts sales are expected to be up 16% month on month while M&M Tractor will see 10% month on month fall.
The demand has been weak and discounts continue to remain higher at Rs 40,000–Rs 50,000 per product. According to Nomura, good monsoons could present an upside risk to estimates.
