Automobiles (wholesale) - Domestic dispatches remain sluggish due to lockdowns - ICICI Securities

Two-wheeler (2W): Exports provide cushion to sales

- Hero MotoCorp (Hero) has reported sales of ~183k units, down 51% MoM. Motorcycle segment dropped 47% MoM while the scooter segment declined ~87% MoM.

- TVS Motors (TVSM) has reported a 30% MoM drop to ~167k units. Domestic sales declined 60% MoM to ~52k units while exports grew 7% MoM at ~115k units. On segmental level, 2W sales dipped 32% MoM to ~155k units and 3W sales were down just 2% to ~12.5k units (led by exports). On a sub-segment basis, motorcycles and scooters declined 6% / 70% MoM to ~125k / 19.6k units respectively, while mopeds slumped 65% to ~9.6k units.

- Bajaj Auto (BAL) has reported a 30% MoM drop to ~272k units. Domestic sales fell 55% MoM to ~60.8k units, while exports too declined 17% MoM to ~211k units. On a segment level, motorcycle sales shrunk 31% MoM (domestic: -52%, exports: -19%) to ~241k units while 3Ws fell 21% MoM at ~31.3k units.

- Royal Enfield has reported 43% YoY / -49% MoM growth to ~28.5k units with new product launches (e.g. Meteor) aiding volume growth. Motorcycle sales in 350cc segment grew 30% YoY to ~23k units while the >350cc segment rose 190% to ~4.6k units. Exports reported 60% MoM growth to 7.2k units.

- HMSI reported 1% YoY / -79% MoM growth with domestic sales down 28% YoY / 84% MoM to ~39k units while exports dipped 55% MoM at 19k units.

Passenger vehicles (PVs): Plant shutdown, regional lockdown exacerbate drop

- Maruti Suzuki (Maruti) dispatches were down 71% MoM to ~46.5k units due to lower domestic dispatches (down 75% MoM to ~35.3k units). Mini-vehicle segment shrunk 81% MoM at ~4.7k units while the compact segment fell 72% MoM to ~20.3k units. UV segment dispatches declined 75% MoM at ~6.4k units. Dispatches to Toyota also saw a drop (71% MoM) at 1.5k units. Domestic sales (ex-commercial & Toyota dispatches) nosedived 76% MoM at ~32.9k units. LCV dispatches dipped only 32% MoM to 868 units.

- Mahindra & Mahindra's (M&M) PV volumes reported 56% MoM drop to ~8k units with the UV segment declining 57% MoM to ~7.7k units. UV segment growth remains below potential due to chip shortages. Key models (e.g. Thar) continue to remain on long waiting periods.

- Tata Motors' volumes saw a lower decline (vis-à-vis peers) of 40% MoM at ~15.2k units, after having aligned sales to retails in Apr'21 (which slipped due to lockdowns). Upcoming launch of compact SUV HBX is likely to further boost volumes.

- Hyundai posted 49% MoM dip in domestic volumes at ~25k units while exports too slipped ~44% MoM to ~5.7k units.

Our view: OEMs are facing increased channel inventory across categories (I-Sec: >4 weeks) due to weak offtake of retail demand due to covid-induced lockdowns. Jun'21 is likely to be challenging from a production planning perspective as consumer sentiment remains soft owing to both covid and increased vehicle prices (up ~3-8% across segments since Jan'21). Restart of various plants have been on a single shift basis as OEMs remain wary of increased stress to channel partners due to soft retails. Faster vaccination could help accelerate consumer sentiment revival in the urban markets.

- Kia Motors has reported 31% MoM drop in domestic sales to ~11k units. The recently launched compact SUV Sonet continues to drive sales momentum; however, new competition in the SUV space continues to limit sales increase.

- MG Motors' domestic sales declined 60% MoM to ~1k units.

- Toyota's domestic volumes were down 93% MoM to 707 units. The plants were shut down for an extended period of time due to labour issues.

- Honda Cars reported a 78% MoM growth in domestic sales at ~2k units. CVs: M&HCVs witness sequential decline while LCVs perform better; rural demand continues to support tractors

- Ashok Leyland's volumes fell 62% MoM to ~3.2k units. Domestic CV volumes were down 66% MoM to ~2.7k units as M&HCV shrunk 62% MoM to ~1.5k units and domestic LCVs dipped 69% MoM to ~1.2k units. Exports grew 22% MoM to 461 units. In light of the covid lockdowns, the company has extended its shutdown for another 2-3 weeks for Jun'21.

- Eicher Motors' CV segment volumes declined 43% MoM to 1.2k units.

- Escorts' tractor volumes were lower by just ~3% MoM at ~6.4k units. Domestic volumes declined 4% MoM to ~6.2k units while exports stood at 265 units (down 55%).

Mahindra & Mahindra's (M&M) CV segment volumes fell 49% MoM to ~7.2k units as LCVs >3.5T declined 82% MoM. Volumes in 3W segment declined 87% MoM to272 units.

Tractor dispatches fell 35% MoM to ~24.2k units as domestic sales were down 13% MoM to ~22.8k units. With all-time high rabi acreage, investments in rural development schemes, monsoon trends and demand offtake post rabi, procurement will be the key monitorables.

- Tata Motors' domestic CV segment volumes fared better than peers as it dropped 35% MoM to ~9.4k units. M&HCV and LCV sales declined by 49% MoM to ~3.5k while LCVs declined just 22% at 5.8k units respectively. Overall export volumes were down just 8% MoM to ~2k units.

Source : Equity Bulls

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