Demand - still uncertain in PVs, improving in 2Ws and robust in CV - Acuité Ratings

PV Segment

The demand for PVs remained muted on a sequential basis during May'22 as reflected by the domestic sales of top 13 PV players in the country. While the strong YoY growth is somewhat misleading given the favourable statistical base of the pandemic disrupted May'21, the domestic sales witnessed a muted growth of 0.3% MoM in May'22 against April'22.

Says Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research Ltd, "In our opinion, the demand pattern in the domestic PV segment is likely to remain volatile in FY23 with the pent up demand factor getting partially offset by the sharply increased fuel prices, increase in vehicle prices led by higher commodity costs as well as longer waiting period for some models over the near term owing to chip shortages."

2W Segment

The overall demand in the 2W segment continued to witness moderate recovery on a sequential basis during May' 22 as per the sales volumes reported by the top 5 players in the industry. The YoY growth reflected in total sales during the month is majorly on account of low base effect. The total sales of the major 5 players in the industry improved by 2.6% MoM during May'22 against April'22.

Says Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research Ltd, "The gradual improvement in domestic 2W sales after a period of weak demand reflects better demand environment in the rural economy. We believe that the demand in the 2W segment will continue on its path of recovery in the current year with the expectation of a normal monsoon and another healthy kharif harvest, that will support a further improvement in the rural economy."

CV Segment:

The domestic CV segment in the Indian auto industry continues to be bright spot. It maintained its growth momentum in May'22 marked by a healthy sequential growth in the domestic sales of the top four CV manufacturers. The sales also showed significant growth on a YoY basis albeit on a low base as the sales were significantly impacted during same month last year due to the onset of second Covid wave.

Says Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research Ltd, "We believe that the growth momentum in CV sector across the country will continue going ahead owing to growing construction activities across the nation including development of National Highways, Railways, Metro Rail and Airports. Furthermore, the normalization of economic activities, healthy momentum in external trade volumes and high demand from the e-commerce industry is expected to further boost the demand of CVs over the medium term."

Link to the report

Source : Equity Bulls

Keywords

AutoSales May2022 PassengerVehicles TwoWheelers CommercialVehicles