MOSL: AUTOMOBILE-Healthy retails, discounts to drive 2W/PV wholesales-CV dispatches expected to be healthy too

​AUTOMOBILE: Healthy retails, discounts to drive 2W/PV wholesales; CV dispatches expected to be healthy too

• Our channel checks indicate healthy retail growth (10-15%) in the 2W and PV segments, led by festive demand and positive rural sentiment, which should drive wholesales for September. CV segment growth is expected to be largely led by LCVs and ICVs. Also, there have been no indications of moderation in discounts in the CV segment.
  
• Our interaction with mass market 2W channel partners indicates healthy growth, led by strong retail demand from key states. Good monsoon and an increase in crop realizations have lifted sentiment in rural/semi-urban areas. Hero MotoCorp (HMCL) is witnessing ~10% retail growth in key states, while TVS Motor (TVSL) and HMSI are outperforming the industry, with growth in excess of 15%. However, Bajaj Auto’s (BJAUT) retail volume growth for key markets is at 7-9%, lagging other OEMs. On the PV front, MSIL is witnessing retail growth in excess of 15%, while Mahindra & Mahindra’s (MM) volumes are increasing at ~8-10%.
  

Key highlights

• MSIL’s domestic dispatches growth is expected at 19% YoY. Demand for Baleno, Brezza and the new Dzire continues to be robust, as these models enjoy a healthy waiting period of 2-3 months. Within its domestic portfolio, CIAZ’s sales are expected to be weak (-16% YoY) due to the GST-led impact on hybrid cars, while growth in the compact segment (+40% YoY) is likely to be driven by the new Dzire.
  
• Tata Motors’ (TTMT) PV segment is expected to grow 25% YoY, led by inventory build-up of its first compact SUV Nexon. CV sales are expected to grow 11.5% YoY, led by a 15% increase in LCV sales, while M&HCV sales are expected to grow 7% YoY.