In May 2023, the auto sector witnessed a mixed performance across different segments. Two-wheeler volumes showed strength due to the wedding season and increased pre-buying of electric vehicles. However, the commercial vehicle (CV) segment experienced subdued demand compared to the previous year, said the domestic brokerage firm Kotak Institutional Equities.
The domestic passenger vehicle (PV) industry recorded sluggish retail volumes compared to the same period last year. On the other hand, the two-wheeler export segment showed a modest improvement on a month-on-month basis, it added.
Domestic PV segment retail sales growth remained muted in May 2023
As per Kotak Institutional Equities estimates, domestic PV industry wholesale volumes increased by 13–15% on a YoY basis in May 2023, whereas retail volume growth remained muted at a low single digit in the same period.
In the case of Maruti Suzuki, the total volumes increased 10% YoY in May 2023. This growth was primarily driven by a 13% YoY increase in domestic segment volumes, offset by a 3% YoY decline in exports, it said.
Its SUV segment witnessed a substantial 26% month-on-month growth in volumes, driven in part by the successful launch of the Fronx model.
As per the brokerage calculations, Maruti Suzuki captured a market share of approximately 42.5-43% in May 2023, marking a 50-basis point year-on-year increase.
Besides, Hyundai Motors reported a 15% YoY growth in May, while Kia Motors experienced flat domestic volumes compared to the previous year, partially due to a maintenance shutdown during the month.
Tata Motors and Mahindra & Mahindra both recorded notable YoY increases in their domestic volumes, with growth ranging from 6% to 22% in May 2023, it stated.
Wedding season and pre-buying of EVs drive domestic 2W demand growth
The domestic 2-wheeler retail industry experienced a strong 10% year-on-year increase in volumes, primarily attributed to two key factors: the pre-buy of electric 2-wheelers ahead of the reduction in FAME II incentives starting June 1, 2023, and the ongoing wedding season, said the brokerage.
In addition, the export segment demonstrated a gradual recovery in volumes during May 2023 compared to the previous month, although it remained relatively weak compared to the same period last year, it noted.
Hero MotoCorp witnessed a 7% YoY increase in volumes for May 2023, while other two-wheeler major, TVS Motor, reported a solid 9% YoY volume growth, driven by a remarkable 42% increase in mopeds and a solid 9% growth in the motorcycle segment.
Royal Enfield, the flagship motorcycle brand of Eicher Motors, witnessed a significant 22% year-on-year volume growth, largely fueled by a notable 32% increase in domestic volumes. Bajaj Auto reported an impressive 29% YoY increase in overall volumes for May 2023.
CV segment demand remains subdued
Commercial Segment (CV) volumes declined by mid- to high-single-digit YoY due to muted demand trends, given the pre-buy of vehicles ahead of the transition to BSVI Phase II in March 2023, the brokerage firm stated.
Tata Motors witnessed a 12% YoY decline in CV volumes, driven by a significant 38% YoY decrease in the intermediate and light commercial vehicle (I&LCV) segment and a 19% YoY decline in the small commercial vehicle (SCV) cargo and pickup segment.
However, this decline was partially offset by an 11% YoY increase in the medium and heavy commercial vehicle (M&HCV) segment and a 7% YoY improvement in the passenger carrier segment, it pointed out.
Similarly, Ashok Leyland reported a 1% YoY decline in volumes, primarily driven by a 9% YoY decrease in the light commercial vehicle (LCV) segment. However, this decline was partially offset by a 4% YoY improvement in the M&HCV segment volumes in May 2023, Kotak added.
Tractor segment volumes experience a slight YoY decline
"In May 2023, the tractor segment observed a low single-digit decline in volumes compared to the same period last year. The domestic tractor industry volumes experienced a marginal YoY decrease."
“However, the overall sentiment in the farming sector remains positive, supported by a record-high Rabi harvest, favorable reservoir levels, and promising predictions by the Indian Meteorological Department (IMD) about the normal southwest monsoon,” said Kotak Institutional Equities.
The brokerage said M&M recorded a 5% YoY decline in total tractor volumes, while Escorts Kubota witnessed a 9% YoY increase in total tractor volumes during May 2023.
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