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MOSL: AUTOMOBILE | Feb-18 Sales Estimates-Overloading ban to continue driving CV wholesales

AUTOMOBILE | Feb-18 Sales Estimates: Overloading ban to continue driving CV wholesales; 2W/PV retail sales in key markets impacted by Holashtak

 

Our interaction with leading channel partners indicates continued demand momentum across segments. However, retails in the month are impacted by inauspicious days of Holashtak in key markets like Gujarat, Maharashtra, Rajasthan and Uttar Pradesh (UP).

 PV retails are healthy, driven by strong rural sales and healthy demand for newly launched products. Momentum in CV wholesales is expected to remain healthy, driven by strict overloading vigilance. However, supply has remained constrained due to limited availability of key components. Hero MotoCorp (HMCL) and TVSL are witnessing better retails than Bajaj Auto (BJAUT). Royal Enfield (RE) demand remains weak in key rural markets.

 Key highlights:

• CV wholesales momentum is expected to remain strong. Strict vigilance of overloading ban in key northern markets has ensured healthy retails.
• We expect Ashok Leyland’s (AL) wholesales to increase 27% YoY to 17.9k units, with HCV and LCV expected to grow at 19.2% YoY and 60.7%, respectively. Tata Motors (TTMT) and VE Commercial’s (VECV) CV sales are expected to grow by 28% each.
• In the PV segment, Maruti Suzuki’s (MSIL) dispatches are expected to grow 18% YoY to 153.8k units. Compact and UV segments continue to grow robustly at 41.2% and 17.6%, respectively.
• TTMT’s PV segment is expected to grow 54.8% YoY, led by its new SUV Nexon, as well as other new models like Tiago, Tigor and Hexa.