Moneycontrol PRO
Upcoming Event:\Option Writing Masterclass by Shubham Agarwal: a session power packed with lots of intelligence and tactics required to sell write options, on 13th July at 5pm. Register Now

Auto March 2018 sales review – CV and tractors segment continues to zoom

Focus on rural economy in an election year and continued investment in infrastructure should boost CV and tractor segments going forward.

April 03, 2018 / 04:40 PM IST

Nitin Agrawal

Moneycontrol Research

Auto players continued to clock strong growth in sales volume in the month of March 2018. Segment-wise performance continued to be robust for commercial vehicle (CV) and tractors on the back of good monsoon, improved rural sentiments and increased production of BS-IV compliant vehicles. Additionally, there has been a revival in three-wheeler sales following government’s decision to end Permit Raj, and a pick-up in exports on the back of improving global climate.

Focus on rural economy in an election year and continued investment in infrastructure should boost CV and tractor segments going forward. Stronger numbers from two-wheeler companies is an early trend and could get some additional support if the revival of rural economy gathers momentum in the coming months.

Commercial Vehicle (CV) – Strong show

The commercial sector has bounced back strongly after initial disruption from demonetisation and the BS-IV transition affected the transport industry last year.

Notably, LCV segment has also started showing strong uptrend in monthly numbers due to increased thrust on agriculture, FMCG and e-commerce sectors and increasing demand coming for container and refrigerated trucks.


Tata Motors registered a significant growth on the back of increasing demand from construction, growing logistics, e-commerce and FMCG applications. The M&HCV truck segment continued to be robust on the back of stringent restrictions on overloading, replacement buying and various infrastructure projects. Demand for higher tonnage trucks and tippers continues to be good.

M&M posted a healthy growth thanks to good monsoon, and rural penetration of the company. The management expects the growth momentum to continue on the back of some recent refresh launches as well as the better performance of its product portfolio. The management is particularly buoyed by the growth of its truck business, which has outperformed the industry.

Eicher Volvo also witnessed a significant growth of 30.4 percent (YoY) in the month. Ashok Leyland also continued to post strong growth (20 percent YoY).


Cars Segment – leader continued its mojo

The leader, Maruti, continued to top the charts in PV (Passenger Vehicle) segment with 15 percent growth, mainly driven by 24.3 percent growth in UV (Utility Vehicle) segment.

For Tata Motors, passenger car segment witnessed a decline of 4 percent (YoY) whereas its UV segment trebled, thanks to the strong demand for its Nexon, a compact SUV.

Initial signs of revival are visible in the numbers of M&M as well and it posted a growth of 4 percent (YoY). With three new automotive launches lined up in FY19, the management is confident of increasing companies’ market share in the utility vehicle space.


Two-wheeler (2W) segment: TVS is gaining momentum

In the two-wheeler space, Eicher witnessed strong sales of bikes below 350cc with a growth of 18.8 percent (YoY) and bikes above 350cc segment witnessed a significant increase mainly because of the lower base of last year.

TVS continues to post a strong growth in the two-wheeler segment primarily because of 40.5 percent growth in bikes and 20 percent growth in scooters. Bajaj’s domestic business witnessed muted growth in March 2018.

Hero, yet again, achieved highest-ever monthly sales and posted a significant growth of 20 percent in the month.


Three-wheeler (3W): Bajaj leads

The overall three-wheeler market continued to gain strength as is evident from the sales number for the March month. This is primarily due to the end of Permit Raj in Maharashtra and new permits in Delhi. Bajaj Auto, the leader in the space, could capture the growth coming in this segment and posted a whopping 150.2 percent (YoY) growth in the domestic three-wheeler segment.

TVS also posted a strong growth of 103.2 percent (YoY) in 3W volumes.


Tractors: gaining on positive rural sentiments

The revival of the rural economy is impacting the numbers of the tractor segment as is evident in the stellar show of both M&M and Escorts.

M&M continued to post significant growth (46.2 percent y-o-y) and Escorts posted a healthy growth of 66.5 percent.

The recent initiatives from the government to bring back strength into rural India should continue to support demand for farm equipment like tractors.


Exports: Revival is on

Auto companies had been struggling in the export markets for long. However, overall revival in the global economy is finally reflecting in the numbers of some of the leading automobile exporters. All auto majors appear to be gaining some foothold in the overseas market.


For more research articles, visit our Moneycontrol Research Page.
Nitin Agrawal is Senior Research Analyst, Moneycontrol. He has been writing research pieces on Automobile, Aviation and Telecommunication sectors, and has previously worked with Crisil.
first published: Apr 3, 2018 03:51 pm
ISO 27001 - BSI Assurance Mark