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ICICI Securities Report
Wholesale volumes in July 2023 were expected to be weak for all segments due to seasonality and are expected to remain subdued in August 2023 too as building up of inventory would start in September 2023 rather than Aug-23 with festive season being in October-November 2023 this year.
Medium and heavy commercial vehicles, tractors and three-wheelers continued to deliver better-than-expected volumes in July-23, as against passenger vehicles and two-wheelers continuing to consolidate.
We expect weakness in two-wheeler segment to sustain in Aug-23, too, due to subdued retails on seasonality and limited scope of inventory build-up in Aug-23.
YoY growth for passenger vehicles remained low despite strong volumes in July 2023 for mass market players due to high base of last year.
M&HCVs did better than expected despite seasonality impact and the effect of heavy pre-buying in Feb-April 2023. Three-wheelers and tractors continued to surprise positively.
Two-wheelers: Largely steady numbers for urban area based makers
Hero Motocorp Ltd. has reported volume decline of 12%/10% YoY/month-on-month at ~3.91 lakh units. Motorcycle sales volumes decreased 14%/11% YoY/month-on-month to ~3.61 lakh units versus scooters, which increased 26% YoY (and down 6% month-on-month) to ~31,000 units.
We believe late festive season this year resulted in the company tightening inventory further from 40 days, and should start pushing wholesales Sep-23 onwards.
Bajaj Auto Ltd. sales were down 10%/6% YoY/month-on-month at ~3.20 lakh units. Domestic sales were 2% lower YoY to ~1.80 lakh units, while exports fell 20% YoY to ~1.40 lakh units.
Motorcycle sales decreased 15% YoY to ~2.69 lakh units with domestic sales down 14% YoY at ~1.42 lakh units and exports down 16% YoY at ~1.27 lakh units. Three wheeler domestic sales surged ~100% YoY to ~37,000 while exports were down 35% YoY at ~14,000 units.
TVS Motor Company Ltd. has reported volume growth of 4% YoY at ~3.26 lakh units. Domestic two-wheelers grew 16% YoY on benign base of last year to ~2.35 lakh. Two-wheeler exports remained subdued, down 21% YoY, at ~77,000 though showing signs of improvement.
Eicher Motors Ltd.'s Royal Enfield reported 32% YoY growth in volumes at ~73,000 units with domestic wholesales up 42% YoY at ~66,000 units and exports down 22% YoY at ~7,000 units.
Passenger vehicles: Holding steady for past four quarters
Maruti Suzuki India Ltd.'s overall volumes were up 3% YoY at ~1.82 lakh units, with domestic passenger vehicle volumes up 6% YoY at ~1.52 lakh units and exports up 9% YoY at ~22,000 units.
Mahindra and Mahindra Ltd. reported 29% YoY growth in PV volumes at ~36,000 units. With increase in capacity from end-CY23 for key models like XUV700/Scorpio, we believe M&M should deliver at least ~35,000/month utility vehicle volumes on an average in FY24E.
Tata Motors Ltd.'s domestic PV volumes were ~48,000 units, flat YoY, with electric vehicles at ~6300 units. With Tiago EV production ramping up, we expect Tata Motors to deliver ~100,000 EVs in FY24E.
We also expect monthly PV volumes for the company to remain in ~45,000-50,000 unit range in FY24E given the absence of any fresh launch.
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