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MOSL: AUTOMOBILE | Jan-18 Sales Estimates-Overloading ban to continue driving CV wholesales; Healthy rural demand to help buoy PV and 2W retails

AUTOMOBILE | Jan-18 Sales Estimates: Overloading ban to continue driving CV wholesales; Healthy rural demand to help buoy PV and 2W retails

 Our channel checks indicate continued demand momentum across segments. Rural markets continue to see healthy demand traction, as the PV and 2W segments continue to see average retail growth of 14-16%, and have been outperforming urban growth.

PV retails are healthy, driven by strong rural demand and healthy demand for newly-launched products. CVs will continue to see healthy momentum in wholesales, driven by strict implementation of overloading ban in key northern states like Uttar Pradesh (UP), Haryana and Rajasthan. Retail momentum in HMCL and TVSL is better than peers.

 Key highlights:

• The CV segment would continue to see healthy wholesale momentum. Strict implementation of overloading ban in key northern markets would spur healthy retails.
• We expect AL's wholesales to grow 37% YoY to 20.4k units, as HCVs and LCVs grow 39% YoY and 28% YoY, respectively. TTMT's and VECV's CV sales are expected to grow by 34.5% YoY and 22.5% YoY, respectively.
• In the PV segment, MSIL's overall dispatches are expected to grow 4% YoY to 149.9k units. Compact and UV segments continue to see robust growth of 8.8% and 44%, respectively.
• Tata Motors' PV segment is expected to grow 27.5% YoY, led by its new SUV, Nexon.
• MM's volumes are expected to increase 14.1% YoY to 63k units, as tractor, LCV and 3W volumes are expected to increase by 24.5%, 56% and 27.6%, respectively.