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MOSL: AUTOMOBILES-Oct‘19 wholesales: More positives than negatives; Record retails help correct inventory across 2Ws/PVs

Automobiles: Oct‘19 wholesales: More positives than negatives; Record retails help correct inventory across 2Ws/PVs

 

Oct’19 wholesale numbers reflect more positives than negatives. While retails set new records, OEMs’ focus on inventory correction resulted in a YoY decline in 2W, PV and tractor wholesales. While PV volumes declined marginally by ~2.4% YoY, 2W volumes were down ~15% YoY on the back of substantial inventory correction. CVs continued disappointing with volumes down ~35% YoY, led by a decline of 51% YoY in M&HCVs (below estimate) and 19% YoY in LCVs.

• 2Ws - below estimate; OEMs in inventory correction mode: 2W volumes declined ~15% YoY, despite a good pick-up in festive sales, as OEMs corrected inventory from 55-65 days to 30 days. 2W volumes declined ~13% YoY for BJAUT, ~20% YoY for TVS and ~18% YoY for HMCL. RE volumes were up 2% YoY.
• PVs - above estimate; festive demand, controlled inventory help: A good recovery during the Diwali festival and under-control inventory resulted in just 2% YoY decline in volumes. MSIL's volume increased ~4.5% YoY led by new products like XL6 and S-Presso, while MM's (UVs incl. pick-ups) volumes were down ~13% YoY.
• CVs - in line; M&HCV drag offset by LCV outperformance: CV wholesales were in line. While M&HCV volumes disappointed with a 51% YoY decline, LCV volumes came in better than our estimate (-19% YoY). TTMT's volumes declined by ~36% YoY (in-line), AL's volumes were down 40% YoY (in-line), while VECV's volumes (down ~37% YoY) were ahead of our estimates.