- The 2022 festival season has proved a boon for Indian automakers, with passenger car, commercial vehicle and tractor registrations increasing 35-66% in October from 2019 levels.
- The struggling two-wheeler segment also witnessed signs of rebound with a 5% increase in registrations compared to the same period in 2019.
- Entry-level passenger cars and 2W continued to struggle, while SUVs and premium 2W continued to witness strong demand.
The festival season has proved a boon for Indian automakers, with passenger car, commercial vehicle and tractor registrations in October surpassing 2019 levels of 35-66%. On the other hand, the two-wheeler segment is also showing signs of recovery with 5% higher registrations than in 2019.
The festival season, which started on Sept. 26 with Navratri and ended on Oct. 24 with Diwali, saw registrations rise 34-44% year-on-year for passenger cars (PV), commercial vehicles (CV) and tractors, according to a report by Jefferies.
On the other hand, the struggling 2W segment is showing signs of reviving after sales fell for three consecutive years after peaking in 2018. According to Jefferies, 2W registrations rose 5% in October compared to the same period in 2019. On a YoY basis. growth was 32%.
“A good festive season bodes well for auto demand in India, which is recovering from the worst slowdown in decades. We expect a strong volume CAGR of 17-19% for PVs, 2Ws and trucks in FY22-25,” the Jefferies report said, adding that falling metal prices could lead to double-digit CAGR for most companies.
Contents
Maruti, Tata, Mahindra report double-digit sales growth
The celebratory cheer for automakers was evident in their sales in October, with Maruti Suzuki, Tata Motors and Mahindra & Mahindra reporting double-digit growth in their sales during the month.
| Company | Units | YoY change | MoM change |
| Maruti Suzuki | 1.67.520 | 21.1% | -5% |
| Tata Motors | 78,335 | 15.5% | -5.3% |
| M&M | 1,13,108 | 27.2% | -0.1% |
Source: Elara Securities
M&M’s auto division reported stronger sales growth of 45.8% yoy during the month, but overall growth was dampened by the tractor segment, which grew 10.6%. However, analysts at Elara Securities say that tractor sales have exceeded expectations.
Demand in the entry-level segment remained weak and inventories piled up, the research firm said, as customers continue to flock to SUVs despite long wait times.
Extended monsoon and delayed harvest limit demand for 2W in rural areas
A prolonged monsoon has resulted in a delayed harvest, and according to analysts at Elara Securities, this has resulted in moderate demand in rural areas for 2W.
Shipments from Bajaj Auto, Hero MotoCorp and TVS Motors were flat year over year, declining 7% consecutively, the research firm said.
In terms of price points, the entry-level segment underperformed the premium segment, while demand for motorcycles was weaker than scooters.
Market leader Hero MotoCorp reported a 17% drop in total sales, Bajaj Auto reported a 10% drop, but TVS reported a 1.5% increase yoy.
Notably, Bajaj Auto reported a significant 31% drop in its exports year on year, but grew 9% sequentially. The company said in a statement that it now expects exports to increase sequentially each month for FY23.
Stars aligned for good tractor demand in the coming months
M&M, one of the leading tractor and farm equipment manufacturers, said the celebratory acclaim has boosted demand for tractors and farm equipment.
“The festive season kept the mood high and led to very strong dynamics in demand for tractors and farm equipment,” Hemant Sikka, president – agricultural machinery sector, M&M, said in a statement on Nov. 1 in the company’s bursary application.
Sikka also said the outlook for rural demand looks good in the coming months, thanks to the government announcing a higher Minimum Support Price (MSP) for Rabi crops and high reservoir levels.
High-frequency indicators suggest that overall economic activity in rural India has normalized over the past three months, according to a Morgan Stanley report, which is another positive sign for auto companies.
ALSO SEE:
CBDC Trial A Milestone In The History Of Money: Shaktikanta Das
Markets become choppy ahead of US Fed monetary policy outcome
Electric mobility platform MoEving raises $2.5 million from JSW Ventures
