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MOSL: AUTOMOBILES-Oct’18 wholesales: Inventory correction throughout

Automobiles: Oct’18 wholesales: Inventory correction throughout; PVs witness fourth consecutive month of muted volumes

 

October 2018 wholesale volumes indicate a bit of inventory correction across segments, this is despite the onset of Diwali festival in November. In PVs, dispatches of Maruti Suzuki (MSIL) declined 9.6% MoM, while in 2Ws there was a decline of 4-6%. CV dispatches were also lower by 14-22% MoM, partly led by cyclicality and initial signs of demand weakening due to financing and liquidity constraints. However, on YoY basis sales grew in healthy double-digits for 2Ws and CVs, partly due to a lower base. Key highlights from Oct'18 wholesale volumes (including exports):

• 2Ws -healthy YoY growth on a low base: Aggregate 2W volumes for listed players (HMCL and TVSL) grew 15.7% YoY (FY19YTD +11%). Oct'18 volumes did witness low inventory push due to muted retail as rise in insurance cost impacted buying sentiments.
• CVs - first month of weak sales in YTD FY19: CVs wholesales were impacted in Oct'18 led by liquidity and financing constraints. M&HCV volume declined 19.7% MoM, while LCV volumes declined by 10.7% MoM. However, both the segments grew 19-22% YoY, partly led by a low base. TTMT continues to outperform AL in M&HCV (since Feb'18), while AL continues to make in-roads in LCVs with faster growth than TTMT.
• PVs - fourth consecutive month of weakness: PV volumes continued to remain weak for the fourth consecutive month impacted by negative sentiments influenced by higher fuel prices, increase in financing and insurance cost, etc. Interestingly, UVs are also equally impacted.