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MOSL: AUTOMOBILES: PVs grow on strong demand and easing of supply chain issues

AUTOMOBILES: PVs grow on strong demand and easing of supply chain issues; 2Ws remain lackluster in spite of the marriage season

 

• Demand for PVs has sustained, while 2W demand recovery remains elusive. Tractor demand is largely stable, while CV demand is improving on the back of Infrastructure activity.
• Our interaction with leading industry channel partners reflects pessimism for 2Ws, after the washout of festive and marriage season sales. PV dealers reflect optimism on strong demand and improving supply from OEMs. Demand for M&HCVs is benefiting from the rise in Construction activity, especially in the Residential Housing segment. Tractor demand was largely stable.
• In Nov'21, wholesale volumes are estimated to decline by 17%/8% YoY for 2Ws/Tractors. Volumes are estimated to grow for PVs by 6% YoY, with the easing of semiconductor availability. CV wholesales are estimated to grow by 25% YoY (LCV/M&HCV by 10%/49% YoY) and 3Ws by 28% on a low base.
• 2Ws: After a dull festive season, 2W retails have failed to pick up during the ongoing marriage season as well. Rural demand has remained muted despite expectations of a pick-up after the harvesting season. Higher fuel prices are restricting the pace of recovery and consequently driving customers' interest in e-scooters, supported by subsidies. Some Premium Motorcycles have a waiting period due to the semiconductor shortages. Inventory in the system stands at 40-50 days. We expect 2W wholesales for BJAUT/TVSL/HMCL/RE to decline by 12%/7%/~25%/15% YoY.
• PVs: Supplies from OEMs are improving sequentially. Post the festive season, inquiries are stable. CNG is preferred by buyers and the increased penetration of CNG pumps is acting as a catalyst. MM's XUV700 and MSIL's Celerio are well received by customers. Majority of bookings for Tata Punch are towards entry-level models due to lower price differential between the high-end Tata Punch and Tata Nexon models. The waiting period continues to remain 1-2 months for fast-selling models. Inventory in the system is around 15-20 days. Volumes are expected to decline by 5.5% YoY for MSIL, but grow 15% for MM (UVs including Pickups) and 72% for TTMT's PV business.