EUR 120.00 For Business Accounts Only

MOSL: AUTOMOBILES: Gradual easing of chip shortages to benefit PVs; CV demand flat MoM; delayed monsoon hurts tractor demand

• Our interactions with leading industry channel partners indicated decent recovery in 2Ws. PV dealers remained upbeat on strong demand and with the gradual easing of chip shortages, wholesale figures have improved sequentially. M&HCV demand has been flat MoM as monsoon in some parts of the country has led to weakened infrastructure activities.
• In Jun'22, wholesale volumes are estimated to grow 7.0%/19.5%/4.0%/65.5%/-3.0% YoY for 2Ws/PV/3Ws/CV/tractor, respectively.
• 2Ws: Jun'22 was decent in terms of retail demand, partly led by delayed monsoon. Premium motorcycles above 150cc have been facing chip shortages leading to a waiting period of ~15 days for BJAUT while there has been some easing in case of TVSL. Inventory in the system has normalized to 30-45 days (v/s average of 40-60 days over the last few months). HMCL has announced a price hike of up to INR3k on all models from July'22.  Improvement in RE supply chain would increase production while Classic 350 and Meteor still have waiting periods due to demand improvement. Some recent incidents of fire have dampened the momentum of e-2W sales. We expect wholesale figures for BJAUT 2Ws to decline ~10% YoY (domestic 2Ws to decline 25%), TVS 2Ws to grow ~26% YoY (domestic 2Ws to grow  37%), HMCL to increase ~5% YoY and RE to grow ~50% YoY.