Growth rate moderating; MHCV stays strong

2 Mar 2023 , 12:11 PM

Analysts at IIFL Capital Services expect sharp deceleration in domestic auto industry volume growth in FY24. PV industry volumes in February 2023 were up about 11% YoY. The 2W industry was up only 8% YoY despite an easy YoY base (-27%). Tractors grew about 20% YoY on a low base of 31% decline in February 2022. MHCV industry growth was strong at about 30%. MHCV SAAR bounced back in February from a relatively weak January. LCV was the only major domestic segment to clock YoY decline in volumes (-2%). Coming to exports, 2W exports saw sharp weakness (-35% YoY), with Bajaj and TVS disappointing. At the company-level, February 2023 saw a sharp pick-up in market-share for Maruti, Hero and Ashok.

MHCV stays strong, but LCV declines YoY; Ashok gaining share across the board

In February 2023, MHCV industry grew ~30% YoY. MHCV SAAR, which had moderated to 360k in January 2023 bounced back to 380k in February 2023. Current SAAR of 380k is higher versus FY23 volume forecast (350k, +45% YoY). LCV industry declined 2% YoY. This is a sharp moderation from the 33% volume growth in CY2022. Ashok’s market-share in MHCV and LCV stood at 33% and 12% respectively, versus 30% and 10% in February 2022. Tata Motors’ market-share is lower YoY in both MHCV and LCV.

PV volumes holding up but YoY growth moderating

Analysts at IIFL Capital Services estimate PV industry to be up 11% YoY in February 2023. They estimate Maruti’s February 2023 market-share at ~44%, which is a good improvement versus ~41.5% in past six months. Tata’s market share stood at 13% versus 12% in FY22. M&M’s UV volumes moderated to 30k from 32-33k in recent months.

Tractors up about 20% YoY, on an easy base

Tractor industry volumes are up about 20% YoY in February 2023, in line with expectations. This was on a very easy base of 31% decline in February 2022. The YoY base will turn neutral in March and adverse from April. Hence, headline YoY growth should moderate sharply from February 2023 levels.

Domestic 2Ws up 8% YoY; 2W exports continue to struggle

2W industry volumes grew ~8% YoY in February 2023. This is underwhelming, as it came on a very easy base of 27% decline in February 2022. Among 2W OEMs, Hero reported a sharp sequential improvement in market-share while Honda saw market-share loss. Coming to 2W exports, analysts at IIFL Capital Services saw sharp weakness in volumes (-35% YoY). While 2W exports have been weak for some time, they believe elections in Nigeria (a big 2W export market) may have magnified the impact in January/February; this may improve from April/May.