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MOSL: AUTOMOBILES (APR-18 SALES ESTIMATES)-Continued demand momentum in PVs, CVs; mixed trends in 2Ws

AUTOMOBILES (APR-18 SALES ESTIMATES): Continued demand momentum in PVs, CVs; mixed trends in 2Ws; Rural markets continue to outperform urban markets

Our interactions with leading channel partners indicate continued demand momentum in PVs and CVs in April 2018. In 2Ws, while key northern markets (Rajasthan, UP and Bihar) and Gujarat are witnessing good growth, key markets in Maharashtra are witnessing flat to marginally positive growth.
We expect CVs to continue seeing healthy wholesales momentum; sales growth should be strong on a low base of April 2017 (pre-buying in March 2017 before BS-IV transition). In 2Ws, demand for 100-125cc motorcycles remains robust, with 15-16% growth in average retails. HMCL is witnessing strong sales in rural markets. In PVs, retail momentum remains strong, particularly in rural areas, with 10-13% growth in retails for MM and MSIL. TTMT too is witnessing good demand for Nexon.

CVs – demand continues to outstrip supply
CVs continue to see healthy momentum in wholesales, as demand continues to outstrip supply in key markets, partially led by short-supply of vehicles.
We expect AL’s wholesales to grow 151% YoY to 17.8k units, with 187.3% YoY growth in HCVs and 87.6% YoY growth in LCVs. While TTMT’s CV sales should grow 150% YoY, VECV’s CV sales should grow 95.5% YoY.

PVs – growth to remain strong
In the PV segment, Maruti Suzuki’s overall dispatches are likely to grow 5.7% YoY to 159.8k units. The compact segment should continue to see robust growth of 11.7% YoY, while UV sales are expected to remain flat YoY.
Tata Motors’ PV segment is expected to grow 31% YoY, led by its new SUV, Nexon, and other new models like Tiago, Tigor and Hexa.
M&M’s volumes are expected to increase 26.5% YoY to 82.7k units, as tractor and UV sales are expected to grow 34.6% and 16.4%, respectively.