As auto companies prepare to announce their wholesale figures on October 1 and 2, analysts forecast mixed volumes, with the festive season expected to boost wholesale numbers. Analysts also observe an improving sentiment in rural areas, bolstered by monsoon rains that have been six percent above normal.
International brokerage UBS suggested that the impact of the early festive period this time coupled with the inauspicious period – ‘Shradh Paksha’ from September 17–October 2 will likely be reflected in September. However, UBS has retained its 'buy rating on TVS Motor and Eicher Motors, while maintaining a sell' on Hero MotoCorp and Bajaj Auto. The brokerage highlighted significant discounting in the two-wheeler segment on e-commerce platforms, a trend expected to persist through the festive season.
However, overall sentiments remain favourable, driven by a sustained recovery among first-time buyers, especially in rural areas, says Yes Securities. While urban demand remains strong, rural demand in regions like the west, central, and south has been outpacing urban for the past 5-6 months. The Ganesh festival sales saw a 5-7 percent growth across both urban and rural markets, and festive-to-festive growth is expected to hit 14-15 percent, despite a high base. Domestic 2W wholesales are anticipated to register a 7-12 percent YoY growth across major OEMs, except Eicher Motor's Royal Enfield (RE), where a 3 percent YoY decline is expected.
As for passenger vehicles, Motilal Oswal suggests that retail sales are expected to decline by 8-10 percent year-on-year (YoY) as the conversion of inquiries into bookings is taking longer than anticipated across regions. Discounts for Maruti Suzuki have moderated by 5-10 percent month-on-month (MoM) in September 2024, depending on the variant. Meanwhile, Tata Motors has introduced price cuts across its vehicle range, excluding the Punch. The price reductions range from Rs 10,000-80,000 for the Nexon, Rs 15,000-30,000 for the Tigor, Rs 15,000-60,000 for the Tiago, and Rs 50,000-180,000 for the Safari and Harrier.
In the commercial vehicle (CV) segment, both medium and heavy commercial vehicles (MHCVs) and light commercial vehicles (LCVs) are estimated to see a 10-12 percent YoY decline in retail sales, primarily due to seasonal monsoon effects. A delay in government tendering processes is also contributing to postponed purchases by fleet operators, especially for tippers.
Yes Securities expects tractor sales to grow by 8-10 percent year-on-year (YoY), partly due to a low base, though sentiments remain weak with signs of gradual improvement. The rain deficit in northern states like Bihar, Haryana, Punjab, and the North East has further weighed on demand, while most of central and northern India have received normal rainfall, and western and southern states have seen excess rains. Tractor volumes are expected to pick up in October-November, driven by festive demand and sowing activity for key crops such as paddy, oilseeds, pulses, and sugarcane, the brokerage said.
"Additionally, the Jharkhand state government has announced a 50 percent subsidy on approximately 4,000 units in September 2024. Despite a high base, we anticipate 5-8 percent growth in dispatches for Mahindra & Mahindra and Escorts," Yes Securities added.
The Nifty Auto index closed 27,027, lower by over 2 percent after major names such as Bajaj Auto, Tata Motors, M&M, and Hero MotoCorp tumbled in today's session.
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