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​Automobiles: Industry witnesses inventory build-up to meet festive demand; PV and 2W sales to see healthy growth in dispatches

​Automobiles: Industry witnesses inventory build-up to meet festive demand; PV and 2W sales to see healthy growth in dispatches

• -2W and PV wholesales volume is expected to be healthy, led by inventory build-up to meet festive demand and gradually improving retails post GST implementation. Growth in the CV segment will be largely led by LCVs.
• -Our interaction with mass market 2W channel partners points toward a gradual recovery in retails from the second half of July. Factors such as good monsoon and increase in MSPs have lifted sentiment in rural/semi-urban areas. Pre-festive demand is evident in states like Maharashtra and Gujarat.

• Key highlights:
• -MSIL’s domestic dispatches growth is expected to come in at 11% YoY. Demand for Baleno, Brezza and New Dzire continues to remain robust as these models enjoy a healthy waiting period of 3-4 months. Within the domestic portfolio, CIAZ sales are expected to be weak due to GST impact on hybrid cars (forms ~60% of CIAZ sales).
• -Tata Motors’ PV segment is expected to decline 5% YoY, while the CV segment is likely to continue its downtrend with a decline of 3% YoY, led by a 12% fall in HCVs.
• -MM’s volumes are expected to increase by 7% YoY, as tractor volumes are likely to increase by 25% YoY and UV volumes by 2.3% YoY. However, 3W sales are expected to decline 27% YoY.
• -In the 2W segment (barring BJAUT), HMCL and TVSL wholesales are expected to increase at a healthy 20% and 15%, respectively, led by improving retails in key states and inventory build-up to meet festive demand. BJAUT is likely to record a decline of 2.3% YoY due to weak 3W and exports sales.
• -We expect RE volumes to grow at 19.9% YoY to 64k units.