Kerala floods to impact auto companies' August sales; Maruti, Eicher Motors to be in focus

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26 Aug, 2025 12:21

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Auto sales for August are likely to take a hit on the back of devastating floods that hit Kerala earlier this month. Research firms such as Nomura and Edelweiss Securities expect two-wheeler sales to be impacted as well.

With the festive sales period of Onam being a subdued one, coinciding with the floods timeline, Edelweiss said that the impact in near term could be acute.

The brokerage further added that Kerala accounts for 8 percent of overall passenger vehicle sales, 4 percent in two-wheelers and 5 percent in three-wheelers in FY18.

Having said that, magnitude of impact will be determined by companies’ ability to divert sales to other states – a function of the share of wait-listed products in portfolio, and extent of damage and time required for activities to normalise.

Nomura, meanwhile, has said that it expects flat sales for passenger vehicles and two-wheelers. But it expects medium and heavy commercial vehicles to report single-digit growth in the month of August.

Both the brokerages expect Maruti Suzuki and Eicher Motors to be affected on the back of high exposure to Kerala. Edelweiss said that Eicher Motors has 11 percent exposure to Kerala, while Maruti stands at 8 percent. The likes of Hero MotoCorp, TVS Motor, and Bajaj Auto have the least exposure between 1 and 3 percent.

Having said that, Nomura also reiterated that the overall rural demand momentum remains healthy. The brokerage house is also maintaining 2-wheeler estimates of over 10% industrial growth in FY19F. Among stocks, it remains positive on Hero MotoCorp, while Maruti Suzuki is its long-term top pick in the sector.

Meanwhile, Bajaj Auto’s two-wheeler growth is likely to remain strong at 22% YoY. It also expects TVS’ domestic volume growth to decline 3% YoY due to fall in moped sales.

Going forward, Edelweiss said that sales of models with high demand could be least affected as it will be easy to divert sales to other states.

“Among listed players, Royal Enfield with strong demand for its Gun Metal Grey (GMG) and just-launched Signals could mitigate the impact of weaker business in the state. For M&M, the launch of Marazzo scheduled for September 3 should provide cushion. Maruti may face the heat as waitlists for most of its models, except Brezza, have dwindled,” analysts at the firm wrote in the report.

Further, it added that given activities have just resumed, companies are still assessing the extent of impact on existing stock as well as demand.