FREE

MOSL: AUTOMOBILE-Price hikes taken across segments, barring PV, in April-18-2W retails remain mixed in key markets

AUTOMOBILE: Price hikes taken across segments, barring PV, in April-18; 2W retails remain mixed in key markets, rural sales momentum intact

 

• Our interaction with leading channel partners indicates continued demand momentum in the PV and CV segments in Apr-18. However, the 2W sales trend remained mixed in the month, with key northern markets (Rajasthan, UP and Bihar) and Gujarat witnessing growth, while Maharashtra witnessing flat-to-marginally positive growth.
• In 2Ws, demand for 100-125cc motorcycles remains robust, with average retails in excess of +15-16%. HMCL is witnessing strong sales in rural markets. Further, markets like UP, Bihar and Rajasthan are witnessing healthy marriage season demand.
• CVs are expected to continue witnessing healthy wholesales momentum. The sequential decline in CV discounts was arrested in Apr-18 – this is after ~18-20% fall in discounts since Jan-18.
• In PVs, retails momentum remains strong, particularly in rural areas, with MM witnessing retail growth of 8-10%. TTMT, too, is witnessing good demand for Nexon.
• 3W is witnessing signs of demand normalization in Maharashtra (35% of passenger 3W market) after fulfillment of pent-up demand (post removal of cap on permit issue).
• Price increase across OEMs: 2W OEMs have taken price increase of ~INR300-8,000 per unit. PV OEMs are indicating price increase of ~1-1.5% from May, while CV OEMs have taken average price increase of ~1%.
• We prefer 4Ws over 2Ws and CVs due to stronger volume growth and a stable competitive environment. Our top picks in autos are MSIL and Motherson Sumi among large caps, and Ashok Leyland and Exide among midcaps.