Automobiles (wholesale) - Wholesale dispatches rise amidst year end push - ICICI Securities

Two-wheeler (2W): Premium segment dispatches exceed entry level segment

- Hero MotoCorp (Hero) has reported sales of ~446k units, up 5% YoY. Scooters outperformed motorcycles as it grew ~52% vis-à-vis 3% (for the latter). Overall domestic sales grew 3% YoY while exports were up 74% YoY.

- TVS Motors (TVSM) has reported 17% YoY growth to ~272k units (down 16% MoM). Domestic sales grew 12% YoY to ~178k units while exports grew 28% at 94k units. On segmental level, 2W sales grew 20% to ~258k units and 3W sales shrunk 13% YoY to ~13.8k units largely due to lack of public mobility. On a sub-segment basis, motorcycles and scooters grew 27%/4% YoY to 119k and 78k units respectively, while mopeds clocked 30% YoY growth to 61k units.

- Royal Enfield has reported ~37% YoY growth to 69k units with new product launch (Meteor) likely to drive growth in H2FY21. Motorcycle sales in 350cc segment grew 33% YoY to ~63.6k units while >350cc segment grew 106% to ~5.4k units. Exports reported 82% growth to 3.5k units.

Passenger vehicles (PVs): UV space drives growth but more competition as well

- Maruti Suzuki (Maruti) has reported 20% YoY growth at ~160k units albeit on a lower base. However, the mini-vehicle segment clocked a marginal growth of 4% YoY at ~25k units while compact segment jumped 18% to ~77.6k units. UV segment despatches grew 8% YoY at ~25.7k units, while despatches to Toyota grew 180% to 3.8k units (likely due to Brezza variant - Urban Cruiser launch). The growth was led by commercial facing segments (Vans+LCV's contribution to domestic sales (ex-Toyota) has risen ~410bps YoY to 11.6%) which rose ~84%. Exports were up 31%.

- Mahindra & Mahindra's (M&M) volumes reported 3% YoY growth to ~16k units with UV segment growing 5% YoY to ~16k units. UV segment growth is below market, possibly due to better competitive performance in urban markets from OEMs like Hyundai and Kia. M&M's new Thar is currently at 24 months waiting period.

- Tata Motors posted the highest volume growth amongst all PV OEMs with 88% YoY growth at 23.5k units, maintaining its position as the 3rd largest player as its key models like Altroz and Nexon continue to drive growth.

- Hyundai posted 25% YoY growth in domestic volumes at 47.4k units while exports grew 59% YoY to 19.4k units. The company is witnessing strong sales from the recently launched i20, second-generation Creta, and Venue iMT models.

- Kia Motors has reported 154% YoY growth to ~11.8k units. The recently launched compact SUV Sonet continues to drive sales momentum.

- MG Motors' Hector, launched in Jul'19, and the recently launched Gloster are growing steadily to reach sales of 4,010 units (up 33% YoY).

- Toyota's volumes were up 14% YoY to ~7.5k units. Launch of its Urban Cruiser Compact SUV (rebadged version of Maruti Brezza SUV) in Sep'20 aided sales.

Our view: Post the softening of wholesales in Nov'20 dispatches due to inventory buildup from lower than expected festive sales, OEMs planned a year end push of dispatches prior to sticker price increases in Jan'21. The onset of new CY21 is likely to be good test of consumer sentiment amidst a potential mid-single digit price increases across segments in wake of higher input costs. Urban demand could be key to growth.

CVs: M&HCVs witness slow improvement even as LCVs continue to grow well; rural demand continues to supports tractor sales

- Ashok Leyland's domestic CV volumes were 14% higher YoY to ~11.8k units as M&HCV witnessed 3% decline YoY to ~6k units. Domestic LCVs witnessed strong 31% YoY growth to ~5.3k units. New platform launches on the LCV side is potentially aiding market share expansion for Ashok Leyland. However, exports declined ~17% YoY to 932 units.

- Eicher Motors' CV segment volumes declined 3% YoY to 4.9k units.

- Escorts' tractor volumes rose sharply at 88% YoY growth to ~7.7k units. Domestic volumes improved by a similar 90% YoY at ~7.2k units while exports stood at 503 units. Volumes were supported by easing supply chain worries as well strong expectation of a healthy winter crop with increased cash flows for farmers on account of better crop price realisation.

- Mahindra & Mahindra's (M&M) CV segment volumes declined 13% YoY at ~13.9k units as LCVs <3.5T declined 12% while LCVs >3.5T and M&HCVs declined 36%. Volumes in 3W segment dropped by a sharp 47% to 2,865 units.

Tractor dispatches clocked 25% YoY growth to ~18k units as domestic sales were up 23% to ~17k units. Higher rabi acreage, investments in rural development schemes and demand offtake post mid-Jan'21 would be key monitorables in the upcoming rabi season.

- Tata Motors' domestic CV segment volumes declined 4% YoY to ~33k units. M&HCV sales grew ~19% YoY to ~13k units. LCV volumes were down ~16% YoY to ~16.8k units. Overall export volumes grew sharply, up 14% YoY at ~3k units.

Source : Equity Bulls

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