Auto sector in cruise control ahead of festive season, suggests report
“Rural demand is expected to be driven by normal monsoon and government subsidies. We expect two-wheeler volumes to recover, especially in the entry and executive motorcycle segment, which has been sluggish lately and has started showing improvement in the previous months,” said Sharekhan.
The Festive season is going to continue the growth momentum for the auto sector in India, as per a report by brokerage firm Sharekhan. The report states that positive sentiments and exciting new launches will keep growth momentum in the two-wheeler and personal vehicle (two- and four-wheelers) segments.
“Rural demand is expected to be driven by normal monsoon and government subsidies. We expect two-wheeler volumes to recover, especially in the entry and executive motorcycle segment, which has been sluggish lately and has started showing improvement in the previous months,” said Sharekhan.
The report further added that new launches in the personal vehicle and two-wheeler segments are likely to spark consumer excitement in the medium term.
“We expect robust recovery in CV sales, led by increasing economic activity and improving sentiments of fleet owners at a lower cost of ownership under BS-VI vehicles and a low base. Buses and 3Ws are also expected to see recovery,” added the brokerage firm.
Medium and Heavy Commercial Vehicles (M&HCVs) sales will remain at healthy levels, driven by improving economic and infrastructure activities. Light commercial vehicles (LCVs) are expected to do well because of the surge in e-commerce and better last-mile connectivity. Buses and three-wheelers (3W) are also expected to see recovery, driven by reopening of schools and offices and easing of mobility restrictions.
Talking about commercial vehicles, Umesh Revankar, VC and MD of Shriram Transport Finance Company said, “Demand from M&HCV is predominantly coming from the infrastructure development because wherever the application is for the infrastructure the demand is very high.”
How are companies expected to perform?
The brokerage firm noted that in the two-wheeler segment, Hero MotoCorp is expected to report sales of 4.8 lakh units in August 2022, an increase of 5.8 percent from the corresponding period a year ago, aided by recovery in rural markets.
While TVS Motors is expected to report wholesale movement of 3.3 lakh units, seeing a growth of 12.4 percent, Bajaj Auto’s monthly sales are expected to be around 3.6 lakh units, down by 2.5 percent from August 2021.
The brokerage firm expects Royal Enfield (RE) to sell 67,000 units in the month.
In the three-wheeler segment, Bajaj Auto and TVS Motor are expected to see strong recovery in August 2022.
Maruti Suzuki’s monthly sales are expected at 1.6 lakh units up by 24.1 percent from the corresponding period a year ago while Tata Motors is expected to deliver 48,000 units, showing a growth of 71.3 percent from August 2021 in the personal vehicle segment.
M&M and Escorts tractor sales are expected to report muted growth on a sequential basis due to seasonality and a high base. While in the commercial vehicle segment Tata Motors, Ashok Leyland, are expected to show a growth in sales in August 2022, by 14.7 percent and 48 percent respectively, and Eicher Motors sales are expected to decline by 14.5 percent from the corresponding period a year ago.
The S&P BSE Auto index traded green in the last trading session surging 762.04 points or 2.5 percent at 30,334.18. TVS Motors closed up at 2.98 percent, Bajaj Auto closed at 1.3 percent up and Hero Moto Corp closed 0.5 percent in the green on the BSE on Tuesday.
In the trading session on Tuesday, Maruti Suzuki closed at Rs 9,051, up 2.45 percentl Tata Motors climbed over 3.8 percent and closed at Rs 471; M&M, Escorts Kubota and Eicher Motors closed at over 2 percent in the green on the BSE. While Ashok Leyland settled at Rs 154, climbing 3.98 percent.
(Edited by : Nishtha Pandey)
First Published: Aug 31, 2022 5:04 PM IST
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