Automobiles (wholesale) - Mixed retails trends, supply-side issues drag dispatches - ICICI Securities

Two-wheeler (2W): Premium segment dispatches exceed entry-level segment

- Hero MotoCorp (Hero) has reported sales of ~486k units, down 3% YoY. Scooters outperformed motorcycles as the segment grew ~410% vis-à-vis -9% decline for the latter). Overall domestic sales declined 4% YoY while exports were up ~34% YoY.

- TVS Motors (TVSM) has reported 31% YoY growth to ~307k units (up 13% MoM). Domestic sales grew 26% YoY to ~206k units while exports grew 43% at 101k units. On segmental level, 2W sales grew 34% to ~295k units and 3W sales shrunk 13% YoY to ~12.5k units largely due to lack of public mobility. On a sub-segment basis, motorcycles and scooters grew 45%/36% YoY to 137k and 98k units, respectively, while mopeds clocked 11% YoY growth to 59k units.

- Royal Enfield has reported 8% YoY growth to ~69k units with new product launches (e.g. Meteor) likely to drive growth in FY22. Motorcycle sales in 350cc segment grew 9% YoY to ~64k units while >350cc segment grew 7% to ~4.6k units. Exports reported 103% growth to 4.5k units.

Passenger vehicles (PVs): UV space drives growth but more competition as well

- Maruti Suzuki (Maruti) reported ~4% YoY growth at ~161k units. Mini-vehicle segment clocked a marginal decline of 3% YoY at ~25k units while compact segment also declined ~9% to ~77k units. UV segment despatches grew ~45% YoY at ~24k units, while despatches to Toyota grew 154% to 5.7k units (likely due to Brezza variant - Urban Cruiser launch). Domestic sales (Ex-Commercial & Toyota dispatches) were -1% YoY at 139k units. LCV dispatches grew ~50%. Exports were up 29%.

- Mahindra & Mahindra's (M&M) volumes reported 4% YoY growth to ~21k units with UV segment growing 5% YoY to 20.5k units. UV segment growth remains below market, possibly due to supply side issues and lack of better competitive performance in compact SUV's. New Thar continues to clock healthy growth.

- Tata Motors posted the second highest volume growth amongst all PV OEMs with 94% YoY growth at ~27k units, maintaining its position as the 3rd largest player as its key models like Altroz and Nexon continue to drive growth. The company unveiled its new 7-seater premium SUV under the Safari brand.

- Hyundai posted 16% YoY growth in domestic volumes at 52k units while exports declined 19% YoY to 8.1k units. The company is witnessing strong sales from the recently launched i20, second-generation Creta and Venue iMT models.

- Kia Motors has reported 27% YoY growth to ~19k units. The recently launched compact SUV Sonet continues to drive sales momentum.

- MG Motors' Hector, launched in Jul'19, and the recently launched Gloster are growing steadily to reach sales of 3.6k units (up 15% YoY).

- Toyota's volumes were up 92% YoY to ~11.1k units. Launch of its Urban Cruiser Compact SUV (rebadged version of Maruti Brezza SUV) in Sep'20 aided sales.

Our view: Post the wholesale push to capture year-end sales before sticker prices increase, Jan'21 dispatches softened due to combination of demand slack, supply chain issues. The increase in product prices in Q1CY21 in the wake of higher input costs is likely to keep consumer sentiment in check. Urban demand revival could be key.

CVs: M&HCVs witness sequential improvement even as LCVs continue to grow well; rural demand continues to support tractors

- Ashok Leyland's domestic CV volumes were 14% higher YoY to ~12.4k units as M&HCV witnessed 2% decline YoY to ~6.8k units. Domestic LCVs witnessed strong 42% YoY growth to ~5.5k units. New platform launches on LCV side is potentially aiding market share expansion for Ashok Leyland. However, exports declined ~16% YoY to 232 units.

- Eicher Motors' CV segment volumes grew 2% YoY to 5.5k units.

- Escorts' tractor volumes rose sharply at ~49% YoY growth to ~9k units. Domestic volumes improved 46% YoY at ~8.5k units while exports stood at 511 units. Volumes were supported by easing supply chain worries as well as strong expectation of a healthy winter crop with increased cashflow for farmers on account of better crop price realisation.

- Mahindra & Mahindra's (M&M) CV segment volumes declined 41% YoY at ~13.4k units as LCVs <3.5T declined 41% while LCVs >3.5T and M&HCVs declined 46%. Volumes in 3W segment dropped by a sharp 65% to 2,841 units. Tractor dispatches clocked 50% YoY growth to ~23k units as domestic sales were up 50% to ~22.3k units. Higher rabi acreage, investments in rural development schemes and demand offtake post rabi procurement will be key monitorables in the upcoming rabi season.

- Tata Motors' domestic CV segment volumes declined 2% YoY to ~33k units. M&HCV sales grew ~22% YoY to ~13.3k units. LCV volumes were down ~13% YoY to ~17.4k units. Overall export volumes declined 12% YoY at 2.2k units.

Source : Equity Bulls

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