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Commercial vehicle sales to keep vrooming but two-wheelers will hit the skids

Two-wheelers are facing twin problems of chip shortage and slowing demand

June 30, 2022 / 11:12 AM IST
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Commercial vehicle (CV) makers will post good sequential growth in June sales volume while tractors could also trend higher in the seasonally strong month, said analysts.

The trend, which has been going on for a few months, signals more commercial activities up ahead as the Indian economy recovers from the pandemic.

“As per our channel check, we expect sales momentum for passenger vehicles (PVs), CVs, and tractors to continue to be healthy despite the industry entering into the off-season cycle (July-August),” said Kripashankar Maurya of Choice Broking.

“Whereas we expect two-wheeler (2W) sales to be weak led by higher vehicle and fuel costs, cooling off of marriage related purchases, and weak sentiment in the lower income bracket. On the PV side, demand remains strong due to the preference of personal mobility and new launches.”

Many popular models of M&M and Tata Motors – including Nexon, Thar, Harrier – have months of backlog of bookings as manufacturers have not been able to keep up with the demand, in part also because of a semiconductor shortage. Earlier this week M&M also launched Scorpio-N that is likely to add to demand.


Nirmal Bang, a Mumbai-based brokerage firm, said fleet operators’ optimism is paving way for commercial vehicle demand.

Raghunandhan NL of Emkay Global said he retains his positive view on the auto sector. “Among automakers, we prefer Tata Motors, Maruti Suzuki and Escorts. Among ancillaries, we prefer Motherson Sumi and Minda Industries,” he added.


Investors should note that year-on-year volume figures are not exactly comparable due to high impact of the second wave of the pandemic in the base year.

Auto companies will start announcing their monthly volume data for June from Friday onwards.

CVs: Emkay said on a sequential basis, it expects high single digit growth for Tata Motors and Ashok Leyland. Choice Broking said demand for heavy commercial vehicles (Tipper, Dumper, and trailer) remained decent due to improved utilisation and profitability of fleet operators, and government spending on infrastructure.

PVs: Choice Broking said it expects PV dispatches to be higher on a month-on-month basis as the availability of semiconductors is improving and demand remains strong across categories.

Tractors: Emkay Global said with growth of 11 per cent for Escorts and 10 per cent for M&M in the domestic market, volumes are likely to improve. Growth has been restricted as farmer sentiments have been hit by lower crop realisations in recent months, it added.

2Ws: Currently, high fuel and vehicle prices are impacting demand for 2Ws, while supply is also limited due to chip shortage, said Choice Broking. Marriage season, which drove sales in the last 3-4 months, is also cooling off. Emkay said volumes are expected to improve month on month in the domestic market.
Shubham Raj
first published: Jun 30, 2022 10:58 am
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