Two-wheeler (2W) makers, who were impacted by subdued domestic demand in FY22, are likely to see a rebound helped by the ongoing wedding season and improved rural sentiments on the back of rabi crop harvesting. Also, increased preference for personal mobility augurs well for the 2W segment. Further, with recent incidents of electric 2Ws catching fire, ICE (internal combustion engine) vehicles stand to benefit. However, the elevated fuel prices would continue to remain a risk as total cost of ownership increases.
Accordingly, analysts at Sharekhan expect 2W volumes of Hero MotoCorp Ltd and TVS Motor Co. Ltd to increase by 29% and 32% year-on-year (y-o-y) respectively in April 2022. Bajaj Auto Ltd is estimated to report a 10% y-o-y decline in 2W volumes as it continues to face chip shortage.
Three-wheeler (3W) sales would see increased traction as schools and offices reopen. Bajaj Auto and TVS Motor are likely to report 12% and 17% growth in 3W volumes in April, according to Sharekhan analysts.
While the passenger vehicle (PV) segment is seeing increased demand, supply chain issues are impacting sales. As per Motilal Oswal Financial Services’ analysts, Maruti Suzuki India Ltd’s volumes in April are expected to remain flat with a drop in domestic sales offset by growth in exports. Tata Motors Ltd’s PV segment is likely to see 62% growth while Mahindra & Mahindra Ltd (M&M) is expected to report 40% growth.
CNG (compressed natural gas) vehicles seem to be the preferred variant in PV segment amid higher fuel prices.
This is also true in the case of commercial vehicle (CV) segment where Ashok Leyland Ltd’s recently launched CNG portfolio in intermediate CV segment is seeing increased momentum, said analysts at Motilal Oswal in a report on 27 April.
“Demand for cargo segment operators without long-term contracts has been impacted by high diesel prices, whereas demand from those with long-term contracts and from the infrastructure segment remains buoyant," added the Motilal Oswal report.
Ashok Leyland and Tata Motors’ CV volumes are expected to grow by 102% and 145% y-o-y respectively.
Meanwhile, demand for tractors continues to remain muted. Owing to the high base, M&M tractor volumes in April are expected to decrease by 3% while Escorts Ltd’s volumes are estimated to increase by just 1.7%, according to Sharekhan analysts.
