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MOSL: AUTOMOBILES-Jun’19 Wholesales – Weakness persists across segments-Ashok Leyland and Eicher miss estimates

AUTOMOBILES: Jun’19 Wholesales – Weakness persists across segments; Ashok Leyland and Eicher miss estimates; Tata Motors beats estimates

 

Though weak across segments, Jun’19 wholesales were largely in line as OEMs continued their inventory reduction drive in a tepid retail environment. While PV volumes remained weak (down ~14% YoY, in-line), CV volume declined ~15% YoY (ahead of estimates), led by 22% YoY decline in M&HCVs; LCVs declined 8% YoY. 2W volumes declined ~5% (in-line) and tractor volumes declined ~17% YoY (in-line). Key insights highlighted below:

• 2Ws - Exports save the day, resulting in decline of just ~8% YoY: 2W volumes declined just ~8% YoY, as weak domestic sales were diluted by ~9% growth in exports. Domestic volumes for BJAUT declined ~1%, TVS by ~8% and HMCL (total) by ~12.5%.
• PVs - High base, weak retail leads to ~14% YoY decline: PV volumes remained weak for the 12th consecutive month with currently no signs of recovery from the impact of negative sentiments. However, a new UV product launch helped MM (PV) wholesales, which grew 8% YoY while MSIL dispatches declined 14% YoY.
• CVs - Weak infra activity, liquidity impacts demand: CV wholesales were ahead of estimates driven by TTMT. M&HCV volume declined 22% YoY while LCV volumes declined 8% YoY. TTMT CV volumes declined (~12% v/s est. 26% decline), whereas both AL (19% decline) and VECV (29% decline) disappointed.
• Tractors - ESC continues to outperform MM: Tractor volumes declined 17% YoY led by high base and muted farm sentiments. ESC's volume declined 10% YoY and continues to outperform MM in the tractor segment (decline of 18% YoY).