Tata Motors, TVS, Maruti, Eicher: Analysts Expect Good Sales Ahead After Muted August Numbers

In a mixed signal in the automobile industry, the latest wholesale numbers by vehicle manufacturing companies show a decent pick-up in two-wheleers, while a slowdown in the three-wheeler and four-wheeler segments. The muted passenger vehicle (PV) performance during August 2023 was attributed to inventory correction and a shift in festive (Onam) from August last year to September this year. However, analysts expect good volume trajectories across segments are expected going forward, with 2Ws outstripping others.

According to regulatory filings, Tata Motors saw an 8.1 per cent drop in total sales for August 2024, totaling 71,693 vehicles compared to 78,010 units in August 2023. Maruti Suzuki reported a 4 per cent year-on-year decline in total sales for August, with 181,782 units dispatched compared to 189,082 units in the same month last year.

Eicher Motors also saw a 5 per cent decline in Royal Enfield motorcycle sales, totaling 73,629 units in August 2024 compared to 77,583 units last year.

However, Toyota Kirloskar Motor registered an impressive 35 per cent year-on-year growth in August 2024. It reported wholesale sales of 30,879 units, up from 22,910 units in the same month last year. SUVs and MPVs have been major contributors to the company’s sales

However, MG Motor India reported a 9 per cent year-on-year increase in retail sales for August 2024. Kia India also reported a 17 per cent year-on-year jump in total wholesales for August 2024, with 22,523 units dispatched compared to 19,219 units in August 2023.

The two-wheeler makers posted a strong growth in August 2024. TVS Motor Company saw a 13 per cent increase in total sales in August 2024, reaching 391,588 units compared to 345,848 units in August 2023. Hero MotoCorp reported dispatches of 512,360 units of motorcycles and scooters in August 2024, a 5 per cent increase y-o-y.

What Analysts Say

Analysts at brokerage JM Financials said barring two-wheelers, August 2024 wholesale volume performance was muted across most segments owing to inventory correction and a shift in festive (Onam) to September this year.

Tractor volumes were also flattish YoY in a seasonally muted period.

“Domestic 2W wholesale performance stood strong led by both healthy double-digit growth in domestic 2W vols and gradual recovery in 2W exports. Near-term 2W demand also remains contingent on response to new launches / rural sentiments. E2W momentum is also expected to gradually pick-up led by OEMs’ focus on new affordable launches, production and distribution expansion,” the JM Financial analysts said.

In the Tractor segment, demand was flattish YoY. However, demand momentum is expected to improve with monsoon progressing well and supported by favourable MSP on kharif crop. In PV segment, wholesales in near-term are likely to be a function of response to recent model launches and positive customer sentiment. 2W demand is expected to witness steady momentum. In case of CV segment, volumes are expected to witness recovery going ahead led by strength in the underlying economy, according to JM Financials.

Another brokerage Anand Rathi said, “August 2024 2W wholesale volumes rose to double digits, broadly in line with our estimate. PVs saw a slight decline on moderation of demand, yet broadly as we expected. CV volumes slipped to single digits due to heavy rains and a slow pickup in infrastructure/capex activity. Tractor volumes were flattish, and broadly in line with our expectation.”

It added that good volume trajectories across segments are expected going forward, with 2Ws outstripping others.

“We expect 11 per cent FY25 volume growth in 2Ws, 7 per cent in M&H CVs, 5 per cent in tractors and 4 per cent in PVs. We retain our sanguine view of the auto sector. Our preferred OEM picks are Hero MotoCorp, Ashok Leyland and Mahindra & Mahindra,” Anand Rathi stated.