Automobiles: Retails to increase over Q2 and Q3

By: | Published: August 31, 2017 6:31 AM

We interacted with leading auto channel partners across OEMs from Andhra Pradesh, Delhi, Gujarat, Karnataka, Maharashtra, Madhya Pradesh and Rajasthan to understand the demand recovery scenario post GST implementation and to assess festive demand for 2Ws and PVs in key states.

Andhra Pradesh, Delhi, Gujarat, Karnataka, Maharashtra, AutomobilesWe interacted with leading auto channel partners across OEMs from Andhra Pradesh, Delhi, Gujarat, Karnataka, Maharashtra, Madhya Pradesh and Rajasthan to understand the demand recovery scenario post GST implementation and to assess festive demand for 2Ws and PVs in key states.(Representative Image: IE)

We interacted with leading auto channel partners across OEMs from Andhra Pradesh, Delhi, Gujarat, Karnataka, Maharashtra, Madhya Pradesh and Rajasthan to understand the demand recovery scenario post GST implementation and to assess festive demand for 2Ws and PVs in key states.
Most channel partners in western, northern and central India indicated that demand recovery is still some time away in HCVs, but retails are expected to gradually increase over Q2 and Q3. With GST-related hiccups impacting buying decisions, the industry is expected to witness muted freight volumes, lower rentals and an increase in upfront cost. Further, the slack in tippers demand due to monsoon is expected to impact sales.

2W channel partners are witnessing healthy retail growth of 12-15% y-o-y, led by festive demand, and improved cash position of farmers led by an increase in crop realisations. TVSL, HMSI and HMCL should continue witnessing better retails than BJAUT. On the PV front, MSIL witnessed healthy retail growth of 14-16%. MM is also witnessing volume growth, as well-spread rain in rural areas has boosted sentiment. TVSL and MM channel partners indicated potential price increase of 1.5-2%. The launch of TVS-BMW jointly developed product is expected by Diwali within existing dealerships. 2W and PV channel partners sounded optimistic about retails, led by festive demand and better cash position of farmers due to higher crop realisations.

One of the largest HMCL dealers indicated 15-20% retail sales growth in Rajasthan, led by conversion of pent-up demand in the last six months due to regulatory impact, as well as 7-9% increase in price realisation of key crops like mustard and onion. TVSL, HMCL and HMSI are witnessing better retail demand growth of 8-15% y-o-y, while BJAUT’s retails are relatively stable y-o-y, as its portfolio is urban-focused. Jupiter and Apache are leading TVSL’s growth, while Activa is the sole demand driver for HMSI. HMCL is focusing on market share recovery in the key traditional markets of Rajasthan and Maharashtra. We expect HMCL and TVSL’s wholesales to grow 11.9% and 8.6% y-o-y, respectively. BJAUT’s overall dispatches are expected to increase 3.6% y-o-y.

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