Auto sales May 2023: Cars, two-wheelers thrive; commercial vehicles face challenges

Maruti is estimated to witness a total volume growth of nearly 10 percent, on an annualised basis, at 178,000 units.

Over the next couple of days, Indian auto OEMs (original equipment manufacturers) are expected to report their May wholesales. Analysts anticipate a continued recovery in the two-wheeler space this month, driven by the entry/rural segment supplementing the premium/urban categories, due to an uptick in replacement demand. Overall, there are expectations for volume growth, with passenger vehicle (PV) sales shining in May.

However, volumes for commercial vehicles (CVs) are expected to be subdued due to advance buying in previous months.

Commenting on the overall performance, Jefferies said, "We expect strong 18-19 percent YoY (year-on-year) growth for Bajaj (Auto) and Royal Enfield (Eicher), and 12 percent YoY growth for Mahindra (M&M). We anticipate relatively moderate 4-7 percent YoY growth in wholesales for TVS (Motors), Ashok (Leyland), and Maruti (Suzuki), but foresee a 4-9 percent YoY decline for Tata (Motors) and Hero (MotoCorp)."

Two-wheelers

According to Anand Rathi, two-wheeler volumes in May are likely to have grown double digits year-on-year boosted by the marriage season, replacement demand, and a low base.

Emkay Global expects domestic volumes to improve by 72 percent for Bajaj Auto, 25 percent for TVS Motor, 30 percent for Eicher Motor-Royal Enfield, and 5 percent for Hero MotoCorp. High growth at Bajaj and TVS are due to the low base effect caused by supply constraints last year. Market leader Hero's retail volume is up 11 percent YoY on a month-to-date basis, compared to 4 percent industry growth.

Emkay Global foresees volumes of 75,000 for Royal Enfield in May (up 18 percent from the previous year), 285,000 for Bajaj (14 percent), 305,000 for TVS (6 percent), and 500,000 for Hero (3 percent).

Passenger vehicles

In the PV space, Emkay Global expects Maruti Suzuki to outperform, despite the overhang of the semiconductor shortage impacting production. The research house estimates a total volume growth of nearly 10 percent, on an annualised basis, for the market leader at 178,000 units. Domestic volume growth for M&M is pegged at 30 percent (on a low base) with 35,000 units, while Tata Motors' volumes are expected to grow by 4 percent over the previous year, reaching nearly 45,000 units, as per Emkay Global.

Maruti Suzuki has highlighted the expectation of persistent production loss in the current quarter, with some improvement likely from July 2023, while M&M has indicated a 10-12 percent production impact from short chip supplies, according to the Emkay Global report. The report also mentions Maruti Suzuki's anticipation of SUVs driving market-share gains in FY24 and beyond, based on its strong SUV suite (including the new Brezza, Grand Vitara, Fronx, and the highly-anticipated Jimny, slated for a June 7 launch, though bookings are already open).

Emkay Global believes that Maruti aims to outperform the underlying 5-7 percent industry growth in FY24 and capture a 25-percent market share in the SUV segment as part of its ambition to regain overall market share.

Anand Rathi also estimates a 30 percent year-on-year growth in volumes for M&M, slightly impacted by chip shortages for airbags.

The PV segment has also witnessed an increase in month-over-month blended vehicle discounts on select models.

Commercial vehicles and tractors

According to Anand Rathi analysts, the CV and tractor segments are likely to experience a small decline. However, they expect industry growth to improve in the coming quarters as the impact of early buying fades.

Emkay Global predicts a 12-percent and 17-percent year-on-year decline in wholesale volumes for the two biggest CV makers, Ashok Leyland and Tata Motors, respectively. Escorts' and M&M's tractor volumes are also expected to decline by 2-3 percent from a year earlier.

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