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MOSL: AUTOMOBILES: Mixed commentaries on impact of axle norm on HCVs; Price aggression by BJAUT impacting moped retails

AUTOMOBILES: Mixed commentaries on impact of axle norm on HCVs; Price aggression by BJAUT impacting moped retails

 

Our interactions with leading channel partners indicate mixed reactions to the impact of axle norm on M&HCVs. We note delay in buying decision in northern states where western and southern markets is showing contrasting trends. PV and 2W retails are growing at 10-15%, led by continued healthy demand from rural areas. Price aggression by BJAUT is impacting mopeds and other entry-level motorcycles.

• CVs: While demand remains steady in western and southern markets, it remains soft in markets like Rajasthan and UP, as customers defer their purchases, resulting in inventory levels of 40-45 days. Discounts per unit, particularly in high-ton vehicles, have increased sequentially. We expect CV wholesales for AL and TTMT to grow by 20% YoY and 30% YoY, respectively in July 2018.
• 2Ws: Demand momentum remains healthy, with retail sales growth remaining 10-15% in key rural markets. For BJAUT, TVSL and HMCL, wholesales are expected to grow ~18% YoY, 16% YoY, and 11% YoY, respectively.
• PVs: MSIL is witnessing retail growth of 10-12% in rural markets, while its sales growth in key urban markets remains at 8-9%. MM is also witnessing retail growth of 9-10%, led by healthy demand from rural markets.
• Price hikes: All 2W OEMs except RE have taken average price increase of INR400-500 per unit. No PV players have taken price increases in July 2018.