EUR 120.00 For Business Accounts Only

MOSL: AUTOMOBILES-BS4 inventory clearance underway for 2Ws/CVs; 2Ws awaiting pre-buy

AUTOMOBILES: BS4 inventory clearance underway for 2Ws/CVs; 2Ws awaiting pre-buy | CV inventory largely cleared

 

• Our interaction with leading industry channel partners indicates that BS4 inventory clearance is underway across segments. Wholesales are expected to decline YoY in Feb'20 for all OEMs due to the transitory issues for BS6 vehicles and the weak demand environment. For 2Ws and CVs, inquiries and conversions have remained weak, whereas for PVs (particularly for MSIL) conversion could have been better but for exit from diesel. 2W customers continue to delay buying with expectation of higher transitory discounts. CV sales continued to decline with low demand visibility from construction activities and financiers playing cautious to avoid risk of unregistered BS4 vehicles. Tractor sales grew marginally due to the upcoming harvest season, but demand visibility from construction activity remains low.
• In Feb'20, wholesale volumes are estimated to decline ~20%/~11%/~35% YoY for 2Ws/PVs/CVs due to stopping of BS4 production. Tractors are expected to grow by ~5.5% YoY.
• 2Ws: Demand remains weak due to bleak sentiment, absence of expected heavy discounts on BS4 variants, and confusion among buyers to purchase expensive BS6 variants. System inventory stood at 30-35 days across OEMs, whereas dealers remained confident on liquidating BS4 stock in anticipation of pre-buy by mid-Mar'20. We expect wholesales to decline by 7% YoY for BJAUT (20% fall in dom. 2W), 28% YoY for TVSL and 25% for HMCL, as all OEMs stopped BS4 production in Feb'20. RE volumes are expected to remain flat at 62.5k with limited supplies of BS4 variants.