August auto sales in focus: Vehicle sales are expected to show mixed results in August 2024, according to analysts at the domestic brokerage Nuvama. The two-wheeler (2W) and tractor segments are projected to see growth, while passenger vehicles (PV) and commercial vehicles (CV) may witness declines.
Within the 2W segment, analysts believe, mass-market original equipment manufacturers (OEMs) such as Honda, Hero Moto Corp, Bajaj Auto, and TVS are anticipated to perform well. Conversely, Eicher Motors-Royal Enfield is expected to show a flat performance.
In the PV sector, forecasts are varied. Analysts predict that Mahindra & Mahindra (M&M) will see growth, whereas Maruti Suzuki may face a decline due to a high comparison base from the previous year, as the festive season (Onam) started earlier last year.
“Over FY24–26E, we believe 2W/tractor volumes would grow in high single digits vis-à-vis low-single digits for PV and CV. Our top picks among OEMs are M&M, Bajaj Auto and Escorts,” Nuvama said in a note.
Meanwhile, on the bourses, M&M has dropped 6 per cent over the past month, and Escorts has fallen over 7 per cent. In contrast, Bajaj Auto has bucked this trend with a rise of over 10 per cent, the Bombay Stock Exchange (BSE) data showed.
Segment-wise expectations:
Two-Wheeler (2W): Analysts said industry volumes are projected to grow in the high single digits, around 8 per cent Y-o-Y in the domestic market. This growth, they believe, is driven by strong rural demand and steady urban demand.
Rural sales are expected to be robust due to improved sentiments from normal monsoon conditions. Additionally, wholesales are likely to outpace retail sales due to dealer inventory buildup ahead of the festive season.
Hence, Nuvama forecasts total volume growth of 10 per cent for TVS to 380,000 units, 7 per cent for Bajaj Auto to 365,000 units, and 4 per cent for Hero MotoCorp to 510,000 units. In contrast, Eicher Motors-Royal Enfield is anticipated to remain flat at 77,500 units.
Commercial Vehicles: The commercial vehicle sector is likely to witness a slight decline of around 4 per cent Y-o-Y, primarily due to a high base for cargo vehicles. However, e-way bill generation has increased compared to last year, suggesting better freight availability.
Thus, analysts at Nuvama project a 7 per cent increase in total volume for Eicher Motors-VECV to 6,900 units, flat growth for Ashok Leyland to 15,600 units, and a 4 per cent decline for Tata Motors CV to 30,650 units.
Passenger Vehicles: The volumes are expected to see a slight decline of around 3 per cent Y-o-Y. This muted performance, analysts believe, is attributed to the earlier onset of the festive season (Onam) last year.
Therefore, Mahindra & Mahindra (M&M) is projected to experience robust growth of 13 per cent, surpassing Maruti Suzuki (MSIL) and Tata Motors (TTMT) in the PV segment. We estimate total volume growth of 1 per cent for M&M-Auto (including PV, CV, and 3W) to 71,000 units, a 6 per cent decline for Maruti Suzuki to 152,500 units, and a 2 per cent increase for TTMT-PV to 44,850 units. Additionally, vehicle discounts are higher compared to last year.
Tractors: According to Nuvama analysts, the tractor industry volumes are expected to grow marginally by about 4 per cent Y-o-Y, supported by improved farmer sentiments due to normal monsoon conditions.
Favourable terms of trade, with output inflation exceeding input inflation, analysts opined, are also contributing to positive growth. Hence, Nuvama estimates total volume growth of 8 per cent for Mahindra-Farm and 2 per cent for Escorts, reaching 23,400 and 5,700 units, respectively.
First Published: Aug 28 2024 | 8:37 AM IST
