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MOSL: AUTOMOBILES-No signs of recovery yet; Marriage season demand weak

AUTOMOBILES: No signs of recovery yet; Marriage season demand weak; Production cuts and muted sales inquiries to guide May’19 wholesales

 

Our interactions with leading PV/2W/CV channel partners still indicates no signs of demand recovery at retail level, as sales inquiries have continued to remain tepid. However, production cuts over Mar-Apr 2019 helped inventory levels correct by ~5-6 days in 2Ws/CVs to 35-40 days. 

• 2Ws: While key channel partners are indicating decline in inventory levels, retail sales across key regions remained weak impacted further by ABS/CBS price increase. We expect TVSL/BJAUT wholesales to grow 3.7%/2%, while HMCL wholesales should decline 14.4%. RE dispatches should decline 14.3% YoY to 64k units.
• CV retail too remained weak across regions as demand from all major end user segments remained tepid. Demand for tippers (infrastructure) also slowed significantly on non-release of funds by state governments due to the recently ended general elections. This resulted in average discount per unit remaining high. We expect CV wholesales for AL to grow 0.7%, while for TTMT CV it should decline by 14% YoY.