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MOSL: AUTOMOBILES-Auto retails strong, led by healthy rural sales-Overloading ban in key states to continue driving CV wholesales

Automobiles: Auto retails strong, led by healthy rural sales; Overloading ban in key states to continue driving CV wholesales

 

• Our interactions with leading channel partners indicate continued demand momentum across segments. The 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 for the fifth consecutive month.
• PV retails are healthy, driven by strong rural demand and healthy demand for newly-launched products. MSIL continues to see better retails than competitors - its new S-Cross has an average waiting period of 4-5 weeks, and the inquiries and initial booking trends for new Swift are encouraging.
• CVs will continue to see healthy momentum in wholesales, driven by factors such as strict overloading vigilance in key northern states like Uttar Pradesh (UP), Haryana, Rajasthan and Delhi. Besides, we also note strict overloading ban in southern states like Tamil Nadu. Discount levels continue to be high.
• Inquiries and bookings for TVS Apache RR310 are healthy. To launch its first ever 125cc scooter shortly. TVSL has taken an average price increase of INR300/unit from the second half of January 2018.
• We prefer 4Ws over 2Ws and CVs due to stronger volume growth and a stable competitive environment. Our top picks in Autos are MSIL, Bajaj Auto, Tata Motors and Amara Raja.