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MOSL: AUTOMOBILES | Sep-18 wholesales-CV, 2W, 3W momentum continues

AUTOMOBILES | Sep-18 wholesales: CV, 2W, 3W momentum continues; Third straight month of muted PV volumes

 

We believe that Sep-18 wholesale volumes need to be seen in light of the timing difference of the festive season this year vis-à-vis the last year, as reflected in the decline in tractor and PV volumes. However, 2W volumes benefited from inventory build-up ahead of the festive season. CV demand also remained strong, despite the noise around an increase in rated load. Exports of 2Ws and 3Ws remained robust. Key highlights from Sep-18 wholesale volumes (incl. exports):

• 2Ws - inventory build-up drives strong growth: Aggregate 2W volumes for the listed players increased ~10% YoY (FY19YTD: +15%). Sep-18 volumes would have a limited impact from the insurance norm changes, particularly from the increase in the personal accident cover as it was announced only on 20th September.
• CVs - strong traction continues: CVs exhibited a strong traction in volumes, both in M&HCVs (+27%) and LCVs (+25%). TTMT continues outperforming AL in M&HCV (since Feb-18). However, AL continues making in-roads in LCVs with faster growth than TTMT.
• PVs - third consecutive month of weakness: PV volumes remained weak for the third consecutive month, as factors such as higher fuel and financing & insurance costs hurt sentiment. Interestingly, UVs are also equally impacted as this would be a third consecutive month of weak demand.
• 3Ws - strong growth on a normalized base: Contrary to general expectation, 3W volumes grew ~23% on a high base of last year, with strong momentum in both domestic and export markets.
• Tractor volumes were worst impacted (-14% YoY) due to the timing difference of the festive season. Oct-18 should see strong YoY/QoQ growth.