CVs Sales Strong In December 2022, 2Ws Depressed: Report

Two-wheelers (2Ws): Destocking comes to a halt

Hero Motocorp (HMCL) reported wholesale volumes at 394k units, up 1 per cent MoM (flat YoY). Motorcycle volumes rose 1 per cent MoM vs scooter down 2 per cent MoM.

Bajaj Auto (BAL) sales fell 8 per cent MoM to 281k units. Domestic sales dipped 3 per cent MoM to 249k units while exports declined 14 per cent MoM to 133k units. On segment level, motorcycle sales contracted 6 per cent MoM (domestic up 2 per cent, exports down 12 per cent) to 247k units while 3Ws declined 22 per cent MoM to 34k units. Exports continued to slide from the highs of Jun’22 and, as per management, are set to bottom out at current levels. We expect domestic wholesales to pick pace from Jan’23 with nearly full destocking being done in the system.

TVS Motor (TVSM) reported 13 per cent MoM volume decline at 242k units, down 4 per cent YoY. Domestic 2W volumes shrank 16 per cent MoM (increased 10 per cent YoY) to 161k units while 2W exports fell 8 per cent MoM to 66k units. Overall 3W volumes at 14k units were up 6 per cent MoM (down 8 per cent YoY). On sub-segment basis, motorcycle volumes fell 14 per cent and scooter volumes fell 8 per cent, MoM. Moped volumes too dipped 39 per cent MoM while iQube sales stood at ~11k units.

Royal Enfield reported 3 per cent MoM decline in volumes to 68.4k units (down 7 per cent YoY) while exports remained flat YoY at 8.6k units. Motorcycle sales in the 350cc segment were down 7 per cent MoM to 61k units due to typically lower despatches in the last month of a manufacturing year; sales in the >350cc segment contracted 36 per cent YoY to 7.2k units.

Passenger vehicles (PVs): Seasonally, a month of weak wholesales

Maruti Suzuki’s (MSIL) domestic despatches declined 16 per cent MoM to 117k units (down 10 per cent YoY). Exports were up 10 per cent MoM (down 2 per cent YoY) at 21.8k units. MoM overall volume decline was driven by production holidays impacting wholesales in the mini and compact segments, with other key areas (e.g. UVs, vans, exports) up MoM. Assuming steady monthly retails, we expect wholesales to recover from Jan’23 itself in tandem with planned launches ahead.  

Mahindra & Mahindra (M&M) reported 6 per cent MoM decline in PV volumes to 28.5k units. We believe, strong orderbook for key models, launch of EV model XUV 400, and increase in capacity w.e.f. Apr’23 would boost monthly UV volumes to >35k units p.a. consistently from FY24E; this would also be aided by gradual improvement in chip supply.

Tata Motors PV volumes finally corrected post scaling new highs since Jun’22. Sales were down to 40k units (vs 47k units MoM) with EVs registering 3.9k units (vs 4.4k units MoM).

Hyundai's overall volumes dipped 10 per cent MoM with domestic volumes down 19 per cent MoM (up 20 per cent YoY) and exports up 19 per cent MoM to 19k units.

CVs: M&HCVs post a strong performance

Eicher Motors CV segment volumes were up 47 per cent MoM and 17 per cent YoY at 7.2k units.

Tata Motors delivered a strong show in CVs with overall volumes up 20 per cent MoM (6 per cent YoY). M&HCV volumes were up 33 per cent MoM while LCVs rose 9 per cent MoM to 16.4k and 16.5k units, respectively.

Ashok Leyland reported M&HCV volumes at 11.4k units, up 20 per cent MoM and 50 per cent YoY, with LCV volumes up 12 per cent MoM at 5.7k units.

2W domestic inventory destocking seems to have come to an end with wholesale trends largely converging with retail trends on MoM basis. Though the declining trend continued unabated since Oct’22, it was expected (litmus test would be from Jan’23 to end of marriage season in Jun’23). 

Domestic PV wholesales remained muted due to production shutdowns and typically lower despatches in the last month of a manufacturing year. 

M&HCVs reported a major positive surprise in Dec’22 post consolidating at similar levels since Sep’22. Seasonally, Q4 is the strongest quarter for CV sales.

Tractor retails remained stable in a narrow band with monthly and seasonal volatility being in line with expectations at the wholesale level.