Sales of passenger vehicles and two-wheelers were by and large subdued in August, but manufacturers of commercial vehicles (CVs) have reported robust growth.
While the heavy floods in Kerala and some other areas disrupted sales, dealers pointed out volumes were muted since the festive season this year sets in later than it did last year. Moreover, sales were elevated in August 2017 after the GST rollout on July 1 as dealers built up inventories post the destocking in the June 2017 quarter.
At Maruti Suzuki, volumes (MSIL) were lower by 3.60% year-on-year at 1,45,895 units.” Volume growth was hurt by high base effect and weaker than expected demand due to Kerala rains, analysts said.
Hyundai Motor India and Honda Cars India, too, didn’t fare too well and reported a fall of 2.80% and 1.90% y-o-y, respectively. Volumes of passenger utility vehicles at Mahindra & Mahindra fell 2% y-o-y.
Passengers vehicle sales have slowed for the second consecutive month after July recorded a 2.71% decline y-o-y. Tata Motors, however, bucked the trend, reporting a strong 28% y-o-y increase in volumes. Analysts at Motilal Oswal said models such as Tiago, Tigor, Hexa and Nexon had got off to a good start. With several launches in the current year, we believe the worst is behind for the PV business, they said.
Hero MotoCorp reported flat growth in August at 6,85,047 units. Analysts at ICICI Securities said the volumes of two-wheelers had been affected by disruptions in demand due to severe rains in regions like Kerala and Uttar Pradesh and also the high base effect. Continued two-wheeler registration issues in West Bengal also hurt demand, they said.
Volumes at TVS Motors grew by 2% y-o-y to 2,75,688 units, though Bajaj Auto recorded a strong growth of 27% y-o-y to 2,18,437 units. “The volume growth trends have been strong rising from around 90,000 units in April, 2018 to around 1,27,000 in August aided by new products like Ntorq,” analysts at ICICI Securities said. Axis Capital said it continued to expect TVS to disappoint the street on the margin front with upcoming safety and emission norms.
Volumes in the commercial vehicle segment were strong. While Ashok Leyland recorded a jump of 28% y-o-y to 17,386 units, volumes at Tata Motors were up 26% y-o-y to 39,859 units. The strong performance was attributed to the uptick in industrial activity and infrastructure spending by the government.
Analysts believe the impact of new axle norms would be short-lived and that the underlying demand for CVs continues to be strong. They say markets in the northern part of the country have been impacted more than in the west or south.
M&M recorded a 7% y-o-y growth in tractor sales at 16,375 units during August 2018. Rajesh Jejurikar, president (farm equipment sector), said the announcement of higher MSP for kharif crops will drive positive sentiments in the upcoming festive season. Analysts at Jefferies pointed out that given the strong rural demand tailwinds, management is building in a preliminary 8-10% tractor growth in FY20 as well even after three years of strong growth.
By- Kritika Agrawal