Recovery in PV, CV sales and exports push auto sales in July

Sales of agriculture-related vehicles, such as tractors, which have seen strong momentum, remained slightly below expectations due to delayed monsoon activities. The outlook, however, remains firm as a result of normal monsoon expectations.

“PV and CV volumes outpaced estimates, while two-wheeler and tractor segments missed estimates,” said analysts at Emkay Global Financial Services Ltd.

The sales dispatches by Maruti Suzuki India Ltd, Mahindra & Mahindra Ltd and Tata Motors Ltd are almost equal to pre-covid levels. The need for personal mobility continues pulling up sales for PV. The strong demand is indicated by enquiries and bookings, low channel inventory remains supportive.

As per Emkay Global, industry volumes increased to around 294,000 units, implying a robust 21% CAGR over two years. The volumes were compared with July ’19 numbers as 2020 also saw the impact of the pandemic. The two-year CAGR stood at 70% for Tata Motors, 19% for Maruti Suzuki and 12% for M&M, as per Emkay.

Although two-wheeler sales growth remains muted in the country, a pickup of sales will be watched for in the upcoming festive season. Exports continue to compensate for weak domestic sales, and companies as Bajaj Auto Ltd, TVS Motor Company Ltd with high export share, continue to benefit.

Bajaj Auto saw total volumes increase by 44% year-on-year (y-o-y) led by exports, even as container availability continues to pose challenges. The domestic two-wheeler sale grew just 2% y-o-y, while two-wheeler exports surged 103% y-o-y. Even three-wheelers helped CV exports surge 155% y-o-y. The three-wheeler sales in the domestic arena also grew impressive 70% y-o-y.

For TVS Motors, total two-wheelers registered a growth of 8% y-o-y led by exports. The company’s total exports registered a growth of 65% y-o-y. Three-wheeler exports of the company registered a growth of 80% y-o-y.

Hero MotoCorp Ltd saw total volumes decline 13% y-o-y in July 2021. Royal Enfield volumes increased by only 9% y-o-y during the same period, which analysts attribute to the semiconductor shortage faced by the company.

CV sales continue benefiting from the opening up of the economy with covid restrictions being eased. A pick-up in factory output, infrastructure and road projects, augurs well for the CV industry, say analysts at Kotak Institutional Equities. Tata Motors total CV volumes increased by 88% y-o-y and Ashok Leyland total CV volumes increased by 81% y-o-y in July 2021.