PV industry grew 90% YoY (chip-shortage in base) and 8% MoM. MHCV SAAR in September 2022 stood at 340k, and is higher than IIFL Capital Services’ FY23 volume estimate (325k, +35% YoY). LCV SAAR came in at ~615k, above IIFL Capital Services’ FY23 estimate (600k, +25% YoY).
Analysts at IIFL Capital Services estimate 2W wholesales to have grown ~10% YoY, which is underwhelming given the easy base. The lack of strength may be explained by recent softness in some of the key rural markets. They estimate tractor wholesales to be up 22% YoY. Tractor YoY wholesale growth was high, artificially inflated by early festive inventory filling this year. They expect this to reverse in coming months.
MHCV, LCV growth stays strong
In September 2022, MHCV industry grew about 38% YoY, and 25% MoM. MHCV SAAR stands at ~340k in the month, higher than IIFL Capital Services’ FY23 volume forecast of 325k. Ashok Leyland, which lost share during April-December 2021 (25% MHCV share), improved to ~30% share in January-August 2022, clocking 34% share in September 2022. LCV industry grew 45% YoY. Current LCV SAAR of 615k implies upside to IIFL Capital Services’ current forecast of ~600k (+25% YoY).
PV industry set to meet or beat IIFL Capital Services’ 25% growth estimate
Analysts at IIFL Capital Services estimate PV industry volumes to be up 90% YoY and 8% MoM (chip shortage in YoY base). They estimate Maruti’s market-share at about 42%, which is lower than its FY22 full-year market share of 43.5%. Tata’s market share stood at ~13.5% versus 12% in FY22. M&M has seen sharp ramp-up in UV volumes to ~34k units (versus average monthly volume of ~19k in FY22 and 27k in April-August 2022).
Tractors up 22% YoY, due to inventory filling; expect reversal in October
Analysts at IIFL Capital Services estimate tractor industry volumes to be up 22% YoY. They understand underlying retails have been declining in recent months. However, an earlier festive calendar in 2022 led to tractor OEMs pushing inventory into dealerships earlier this year versus 2021. Analysts at IIFL Capital Services expect this to reverse in October 2022.
Two wheelers — Growth is underwhelming due to weakness in rural markets
Analysts at IIFL Capital Services estimate two wheeler wholesales to have grown ~10% YoY and MoM. This is relatively soft in the context of an easy base (17% decline in September 2021) and an earlier festive season this year versus 2021. Volumes are weaker for Hero than for the rest of the industry. Analysts at IIFL Capital Services believe this is explained by weakness in some of the rural markets and hence, in motorcycles more than scooters. If the rural sentiment doesn’t improve in the festive season, there is a risk of lower wholesales in the post-festive period, as companies would be forced to cut down inventory.
Auto OEMs — Volume Summary
OEMs | Sep 21 | Aug 22 | Sep 22 | % YoY | % MoM | FY23E growth | Implied rate for the rest of FY23 |
Maruti Suzuki | 86 | 165 | 176 | 104% | 7% | 19% | 165 |
Hero Motocorp | 530 | 463 | 520 | (2%) | 12% | 14% | 469 |
Bajaj Auto | 402 | 402 | 395 | (2%) | (2%) | 1% | 377 |
M&M- Autos | 28 | 59 | 64 | 129% | 9% | 42% | 55 |
M&M- Tractors | 40 | 22 | 49 | 21% | 126% | 6% | 27 |
Ashok Leyland | 10 | 14 | 18 | 84% | 24% | 34% | 14 |
Tata Motors | 59 | 79 | 83 | 40% | 5% | 32% | 82 |
Eicher Motors- 2 wheelers | 34 | 70 | 82 | 145% | 17% | 30% | 64 |
TVS Motor | 347 | 334 | 379 | 9% | 14% | 13% | 303 |
Escorts | 9 | 6 | 12 | 39% | 100% | 4% | 8 |
Source: Company, IIFL Research; Note: All absolute volumes are in 000s
E: Estimated
Domestic auto industry volume trend and FY23 growth expectations
Segment | Mar 22 | Apr 22 | May 22 | Jun 22 | Jul 22 | Aug 22 | Sep 22E | FY22 growth | FY23E growth |
PVs | 323 | 293 | 294 | 323 | 341 | 328 | 355 | 13% | 25% |
2 Wheelers | 1,184 | 1,149 | 1,239 | 1,296 | 1,366 | 1,537 | 1,689 | (11%) | 15% |
MHCVs | 41 | 24 | 25 | 27 | 25 | 24 | 31 | 50% | 35% |
LCVs | 56 | 44 | 52 | 53 | 51 | 50 | 52 | 17% | 25% |
Tractors | 73 | 89 | 82 | 94 | 55 | 53 | 113 | (6%) | 5% |
Source: Company, IIFL Research; Note: Absolute volumes are in 000s
E: Estimated
Related Tags
IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000
IIFL Capital Services Support WhatsApp Number
+91 9892691696
IIFL Capital Services Limited - Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
ARN NO : 47791 (AMFI Registered Mutual Fund Distributor)
This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.