MOSL: AUTOMOBILES | NOV-17 SALES ESTIMATES-Strong wholesales on low base of previous year-Rural sentiment remains positive

​AUTOMOBILES | NOV-17 SALES ESTIMATES: Strong wholesales on low base of previous year; Rural sentiment remains positive, new products drive sales

Our channel checks indicate healthy retail growth in PVs, and mixed demand in 2Ws and CVs. Retail demand has dampened after remaining healthy in the festive season. Untimely rain in key markets like Maharashtra and Tamil Nadu partially negated the impact of healthy wedding season demand for 2Ws in the northern belt. PV demand, led by MSIL, was healthy on the back of new launches. CV demand, with the exception of tippers, was subdued, with discounts increasing sequentially. Tippers are witnessing better demand.

Growth rate in rural markets is gradually surpassing that in urban markets. Scooters and new product launches are driving urban demand, while an improvement in sentiment and better crop realization (of key crops like onion, cotton, mustard and grapes) are supporting rural demand. Impact of previous year's low base (when it was hurt by demonetization) is expected to lead to most OEMs reporting double-digit wholesales growth in November 2017.

Key highlights:

• MSIL's domestic dispatch growth is expected to be 9.2% YoY. Demand for Baleno, Brezza, New Dzire and S-cross remains robust, as these models enjoy a healthy waiting period. Mini segment sales are expected to be lower by 15.1% YoY, while CIAZ sales are expected to be weak (-30.1% YoY) due to the impact of GST on hybrid cars. Strong growth in the compact segment (+20.1% YoY) will be led by the new Dzire.
  
• Tata Motors' PV segment is expected to grow 21.3% YoY, led by its new SUV Nexon. CV segment is expected to grow by 30.1% YoY, led by an estimated increase of 36.1% YoY in LCV sales and 22.6% YoY in M&HCV sales.
  
• MM's volumes are expected to increase 41.3% YoY, as tractors, UV and 3W volumes are likely to increase by 44.8%, 37.7% and 51.8% YoY, respectively.