MOSL: AUTOMOBILE-Festive cheer for 2Ws, PVs-CV sales moderate-Both urban and rural markets contributing to healthy retails

​AUTOMOBILE: Festive cheer for 2Ws, PVs; CV sales moderate; Both urban and rural markets contributing to healthy retails in 2Ws and PVs

We interacted with leading auto channel partners across key markets like Andhra Pradesh, Delhi, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Rajasthan, Uttar Pradesh and Tamil Nadu.

Our key takeaways:

• 2Ws and PVs saw healthy festive retail growth (Navratra + Diwali). 2W retails grew at an average of 16-18% (festive season to festive season) across OEMs. Both urban and rural markets contributed to the growth.
  
• In 2Ws, rural markets saw strong growth, driven by Hero Splendor, Hero HF Dawn/Deluxe and Honda Shine.
  
• The growth in rural markets was due to rise in crop realizations, leading to improvement in farmers’ earnings. Further, well-spread monsoon in key markets and farm loan waivers in select states are also aiding healthy retails. The growth rate in rain deficient areas has been relatively low.
  
• Rural-focused HMCL witnessed 18-20% growth in key traditional markets. TVSL and HMSI are also witnessing similar growth levels (largely in urban markets). For BJAUT, there has been divergence in growth rates across regions.
  
• In PVs, MSIL’s festive retails grew in excess of 15%. MM is also witnessing 10-12% volume growth.
  
• Strict enforcement of CV overloading ban in key states like Haryana, Rajasthan Uttar Pradesh (UP) and Delhi is aiding an increase in demand for HCVs.
  
• Our top picks in Autos are MSIL, Tata Motors, Ashok Leyland and Amara Raja.