The automakers are expected to have a good start to FY13, which is evident from analysts’ expectations of growth in April 2022 volumes. It is true that last year’s lower base helps in volume growth. But the segments are poised for recovery.
Two-wheeler (2W) manufacturers, which were hit by weak domestic demand in FY22, are likely to be helped by improving rural sentiments on the back of the ongoing wedding season and rabi harvest. Also, increased preference for personal mobility bodes well for the 2W segment. In addition, with the recent incidents of electric 2W fires, ICE (internal combustion engine) vehicles benefit. However, rising fuel prices will continue to be a risk as the total cost of ownership rises.
Accordingly, Sharekhan analysts expect Hero MotoCorp Ltd and TVS Motor Co Ltd 2W volumes to grow 29% and 32% year-on-year (Y-Y) respectively in April 2022. Bajaj Auto Ltd forecasts a 10% year-over-year decline in 2W volumes as it continues to face chip shortages.
The reopening of schools and offices will lead to an increase in sales of three wheelers (3W). According to analysts at Sharekhan, Bajaj Auto and TVS Motor may register 12% and 17% growth in 3W volumes in April.
While the passenger vehicle (PV) segment is witnessing an increase in demand, supply chain issues are impacting sales. According to analysts at Motilal Oswal Financial Services, Maruti Suzuki India Ltd.’s volumes in April are expected to remain flat with decline in domestic sales driven by increase in exports. Tata Motors Ltd’s PV segment likely to see 62% growth Mahindra & Mahindra Ltd. (M&M) is expected to register a growth of 40%.
CNG (compressed natural gas) vehicles seem to be the preferred variant in the PV segment amid high fuel prices.
Analysts at Motilal Oswal said in a report on April 27 that the same is true for the commercial vehicle (CV) segment, where Ashok Leyland Ltd.’s recent intermediate CV segment is witnessing growth in the CNG portfolio.
“Demand from cargo segment operators without long-term contracts has been impacted by higher diesel prices, while demand from the long-term contracts and infrastructure segment has seen a spurt,” said the Motilal Oswal report.
The CV volumes of Ashok Leyland and Tata Motors are expected to grow by 102% and 145%, respectively, on a year-on-year basis.
Meanwhile, the demand for tractors remains muted. Due to the high base, M&M’s According to analysts at Sharekhan, tractor volume is expected to decline by 3% in April, while Escorts Ltd.’s volume is expected to grow by only 1.7%.