PV volumes expected to log 7-9% fall; double-digit decline is likely for MHCV and 2-W segments.
Auto sector volumes remained weak in February 2020 mostly led by inventory correction taken up by OEMs. As per our estimate, the PV industry is expected to report 7-9% y-o-y decline in volumes in February 2020. Also, MHCV and 2W industry is expected to report double-digit decline led by inventory correction. Tractor demand remains robust with double-digit y-o-y volume growth led by record Rabi crop output and hike in MSPs, which will in turn boost farmers’ income.
PV volumes set to decline in February
As per our estimate, the passenger vehicle industry is set to report 7-9% y-o-y wholesale volume decline on a y-o-y basis in February 2020 due to (i) inventory correction undertaken by major OEMs to clear off BS-IV inventory, (ii) deferral of purchase by the consumers in expectations of further increase in discounts in March 2020 and (iii) the impact of production cut by a few OEMs due to supply chain disruption caused by coronavirus. Maruti’s overall volumes declined by 1% y-o-y to 147,110 units in February 2020 led by (i) 2% y-o-y decline in domestic volumes and (ii) 7% y-o-y increase in exports volumes. Toyota India PV and Honda Motors volumes declined by 12-47% y-o-y in February 2020. Tata Motors domestic volumes declined by 31% y-o-y and Hyundai Motors domestic PV volumes declined by 7% y-o-y. MG Motors sold 1,376 units and Kia Motors sold 15,644 units (+1.3% m-o-m) in February.
M&M’s tractor volumes up 19% y-o-y in February 2020
Mahindra’s auto division reported 42% y-o-y volume dip in February 2020. M&M’s overall tractor volumes rose by 19% y-o-y led by (i) 21% y-o-y rise in domestic volumes. Escorts domestic volumes increased by 16% y-o-y.
M&HCV segment continued to decline
Tata Motors domestic CV volumes declined by 35% y-o-y in February 2020 led by (i) 46% y-o-y decline in M&HCV volumes and (ii) 33% y-o-y decline in I&LCV volumes. VECV’s total volumes declined by 29% y-o-y. Ashok Leyland volumes declined by 37% y-o-y led by(i) 45% y-o-y decline in M&HCV segment and (ii) 17% y-o-y decline in LCV segment.
Two-wheelers too continued to slip
Royal Enfield’s volumes increased by 1% y-o-y. Bajaj Auto total volumes fell by 10% y-o-y. TVS Motor’s total volumes declined by 15%. Hero MotoCorp total volumes declined by 19% y-o-y in February 2020.