Last Updated : Jul 03, 2018 03:11 PM IST | Source:

CV, tractor sales continue to zoom in June

Stronger two-wheeler sales is an emerging trend and could receive additional support from the back of a revival in demand

Nitin Agrawal @NitinAgrawal65

Automobile  players continue to clock strong volume growth in June. Performance continues to be robust for all segments because of the base effect. The transition towards Goods & Services Tax (GST) led to de-stocking last year and consequently very little offtake in June 2017.

Factors like expectation of a normal monsoon, improved rural sentiment and investment in infrastructure are resulting in strong demand for commercial vehicles (CV) and tractors . A revival in three-wheeler (3W) sales is due to the government’s decision to end permit raj. The pick-up in exports is on the back of an improvement in the global climate.

The CV and tractor segments should see a strong run going forward given the government's focus on the rural economy in an election year and continued investment in infrastructure. Stronger two-wheeler (2W) sales is an emerging trend and could receive additional support from the back of a revival in demand.

Strong showing by the CV segment

The commercial vehicle sector continues to remain buoyant on the back of increasing focus on infrastructure, demand from construction and increase in mining activities.

Light commercial vehicle (LCV) segment has also started showing a strong uptrend in monthly numbers due to increased thrust on agriculture, FMCG and e-commerce sectors and increasing demand accruing from container and refrigerated trucks.

Tata Motors registered significant growth on the back of reasons stated above. Volumes from the medium and heavy commercial vehicle (M&HCV) segment continued to remain robust on the back of stringent restrictions on overloading, replacement buying and various infrastructure projects. Demand for higher tonnage trucks and tippers continues to remain strong.

Mahindra & Mahindra (M&M) posted healthy growth thanks to its rural penetration. The management expects growth momentum to continue on the back of some recent refresh launches as well as better performance of its product portfolio.

Eicher Volvo witnessed 62.1 percent year-on-year (YoY) growth in June and Ashok Leyland saw a 28 percent YoY growth.


Cars segment: Maruti marches on

Passenger vehicle (PV) segment leader Maruti Suzuki continued to top the chart with a whopping 46.5 percent YoY growth. During June, growth in the utility vehicle segment was 39.2 percent as compared to a muted 0.8 percent YoY growth last month.

For Tata Motors, PV sales grew 21.7 percent (YoY). The UV segment continued to witness significant growth (396.4 percent), thanks to strong demand for Tiago,Tigor, Hexa and Nexon.

Initial signs of a revival are visible in the sales numbers of M&M, which grew 11.9 percent (YoY). The management indicated there have been an encouraging response to its recent launch - the Plush New XUV500.


Bajaj Auto gains momentum in 2W space

In the two-wheeler space, Bajaj Auto was market leader, clocking 85.9 percent YoY growth in June. Eicher Motors continued to witness YoY growth at 17.9 percent. TVS Motor Company posted healthy 14.9 percent and 13.6 percent YoY growth in bikes and scooters, respectively.

Hero MotoCorp, yet again, posted a significant 12.9 percent YoY growth in June. The management said forecast of a normal monsoon and a strong pipeline of new products will sustain its growth momentum going forward.


Steller showing by 3W space

The 3W market continues to gain strength after the end of permit raj in Maharashtra and new permits in Delhi. Bajaj Auto, leader in this space, could capture growth accruing from this segment and posted a whopping 78.2 percent (YoY) growth in the domestic 3W segment. TVS also posted a 140.9 percent (YoY) growth in 3W volumes. The same for M&M was 68.9 percent YoY.


Positive rural sentiment boosts tractor sales 

Revival in the rural economy and expectations of a normal monsoon are impacting tractor numbers  as is evident in the stellar showing by both M&M and Escorts. The latter posted a healthy 72.1 percent (YoY) growth, whereas M&M posted a YoY decline of 18.3 percent. The government's recent initiatives should continue to support demand for farm equipment like tractors.


Exports revive 

Exports from auto companies have been struggling for a while now. An overall revival in the global economy is finally reflected in the numbers of some of the leading automobile exporters. All auto majors barring Maruti have posted strong YoY growth in the overseas market.


For more research articles, visit our Moneycontrol Research page
First Published on Jul 3, 2018 03:07 pm
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