GST impact: Deutsche Bank expects tepid month for 2-wheelers, retains buy on Eicher

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26 Aug, 2025 12:21

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Deutsche Bank expects a soft month for the 2-wheeler segment due to GST related de-stocking with the bulk of the weakness driven by a 36 percent Y-o-Y decline for Bajaj Auto. It sees a robust scooters volumes growth for June-2017 but with motorcycle weakness driven by Bajaj Auto.

Domestic two-wheeler volumes for June 2017 grew by an estimated 4 percent Y-o-Y driven by scooters (+13 percent Y-o-Y) while motorcycles continued to lag (+2 percent Y-o-Y). Year to day (YTD) volume growth for 2W industry at 8 percent Y-o-Y is currently running behind FY’18 growth forecast of 12.6 percent Y-o-Y, the research firm said.

It is also of the view that among the mass-market players, both Hero MotoCorp (+13 percent YoY) and TVS Motor Company (+11 percent Y-o-Y) outperformed industry volumes while Honda grew only 2 percent Y-o-Y. Eicher Motors continues to clock healthy growth (+26 percent Y-o-Y) in the high-end bike segment while on the other hand Hero and TVS had increased incentives to some extent to drive higher sales in June while Honda had resorted to higher local advertising and Bajaj Auto had passed on the GST-related benefits in June itself but that doesn't seem to have aided sales.

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The research firm has maintained buy on Eicher Motors, a hold on Hero MotoCorp and Bajaj Auto while it has a sell on TVS Motor Company.

According to Deutsche Bank, Hero Moto’s overall volumes for June 2017 was at 624,185 units (+13.6 percent Y-o-Y) with FY’18 volume growth forecast of 10.6 percent which implies a monthly run-rate (MRR) of 613,341 units over the next nine months versus YTD MRR of 616,458 units. Hero's YTD market share is at 37 percent (FY’17 at 37 percent).

Bajaj Auto’s overall (domestic + exports) 2-wheeler volumes for June 2017 was at 204,667 units (-25 percent Y-o-Y) and 3-wheeler were at 40,211 units (-8 percent Y-o-Y) with FY’18 2W/3W volume growth forecast of 12 percent/10 percent that implies a MRR of 313,226/41,207 units over the next nine months versus YTD MRR of 258,571/37,573 units. Bajaj's YTD 2W market share is at 8.7 percent (FY17 at 11.4 percent), it added.

Honda’s domestic volumes for June 2017 is at 416,498 units (+2 percent Y-o-Y). Scooters were at 271,017 units (+2 percent Y-o-Y) and motorcycles at 145,481 units (+2 percent YoY). Honda's market-share has been on an up-trend and its YTD 2W market share is 30 percent (versus 27 percent in FY’17).

TVS Motors’ overall (domestic + exports) 2W volumes for June 2017 was at 268,638 units (+12 percent Y-o-Y). Scooters were at 90,448 units (+34 percent Y-o-Y), motorcycles at 112,146 units (+18 percent Y-o-Y) while Mopeds were weaker at 66,044 units.