Dear Reader,
The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.
February wholesale data from auto original equipment makers (OEMs) saw rising demand across all segments. While the demand-led recovery has pushed sales growth in commercial vehicles (CV) and passenger vehicles (PV) beyond pre-COVID levels, there is optimism even in two-wheelers, which have been lagging compared to other segments.
The domestic auto recovery is getting more broad-based although retail segment demand has been sustained mainly due to demand from the urban and higher-end customer. This is reflected in robust sales in utility vehicles (UVs), particularly in newly launched models. February PV registrations rose by about 10 per cent year-on-year (yoy) and were about 17 per cent higher than February of 2019 -- the year before the pandemic. Even the recent 1-2 per cent price hikes by leaders such as Maruti Suzuki, Tata Motors and Mahindra and Mahindra did not dampen sentiment.
While two-wheelers were seeing improved off-take in premium bikes, February data brought some cheer in the lower-end models, too. Will rural demand improve and give a leg-up to lower-end models in the coming wedding season? Read this article from MCPro Research.
The sales trajectory of CVs is closely tied to economic growth, where India is marching ahead of its peers. While the light commercial vehicle sales are yet to rev up, the explosive yoy growth of 20 per cent in medium heavy CVs is attributable to the infrastructure push and stable freight demand. Another key reason is that heavy pre-buying was witnessed before transition to OBD-2 norms (onboard diagnostic device), which is expected to get implemented from April 2023. The movers and shakers of this segment -- Tata Motors and Ashok Leyland -- have been posting strong sales numbers over several months.
But there are headwinds that are gaining force. Will these derail auto recovery or moderate the pace of growth? While the agricultural outlook is positive, it is yet to reflect in small car and 2W sales numbers. Furthermore, the price increases on account of rising safety standards and higher interest rates are bound to hurt the lower-end models.
A report by Motilal Oswal Financial Services quotes Shashank Srivastava, executive director of Maruti Suzuki as saying, “Market growth is likely to come down to 5-8 per cent due to several headwinds emerging on the horizon,” adding that recent price hikes are yet to impact demand, but post-February will be an interesting phase.
In the retail market too, demand for lower end vehicles continues to drag as was the case in earlier months. So far, exports have been bleak as developed markets and some developing nations are battling their own internal fiscal and currency issues. In fact, the managements of some OEMs indicate that an export recovery may still be two to three quarters away.
Investing insights from our research team
Axis’ buy of Citi’s consumer business comes with minimum negative surprise
El Nino Impact: Gainers and losers if monsoon fails
Is it time to look at this quality chemical company?
What else are we reading?
Citibank’s failure to build an emotional bond with India will ensure it won’t be missed
Why investors should not fear heat waves yet
Chart of the Day: Financial conditions in EMs ease, but keep an eye on the dollar
Startup Street | Is reverse flipping going to trend?
Airlines defy gravity as economic gloom fails to bring them down to earth (republished from the FT)
Can India's UPI become the payments system for the developing world?
Banish those thoughts of LPG subsidy ending in the near term
State capex falls short on sluggish execution. But ambitions soar
Fed’s credibility can’t take a soft landing
Technical Picks: Aluminium, UPL, JSW Steel, Maruti and HAL (These are published every trading day before markets open and can be read on the app).
Vatsala Kamat Moneycontrol Pro
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
