General
Car Sales Stay Flat in July; Automakers Eye Festive Season for Recovery | Image:
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India’s automobile sector showed signs of cooling in July, with retail trends weakening across most segments, except for tractors, according to a brokerage report by Emkay Global Financial Services. While automakers reported healthy dispatch numbers, thanks to exports, market share gains, and low-base effects, underlying demand at the retail level appears to be softening.
General PV wholesales remain subdued
Passenger vehicles (PVs) were a mixed bag. Mahindra & Mahindra (M&M) continued to post strong wholesale numbers, with domestic PV dispatches up about 20% year-on-year. However, retail sales for M&M plateaued, and its popular internal combustion engine (ICE) SUVs saw a decline in sales for the first time in several quarters. Maruti Suzuki grew modestly, with overall dispatches up 3% and exports jumping 32%, but saw subdued domestic volumes. Meanwhile, Tata Motors and Hyundai reported double-digit declines in PV sales.
General Two-wheelers show impressive numbers
The two-wheeler (2W) space delivered robust wholesale numbers, led by TVS Motor Company and Eicher’s Royal Enfield, which posted 30% and 31% YoY growth respectively. Hero MotoCorp also saw gains on a low base. But at the retail level, the picture was more muted. Industry-wide 2W sales dropped about 7% in July after three months of growth. Bajaj Auto continued to underperform in the domestic market, though its export volumes were strong.
General E2Ws witness an upsurge
Electric two-wheelers (E-2Ws) continued their upward trajectory, with market penetration rising to 7.6% from 6.1% in May. TVS remained the segment leader, followed by Bajaj, Ola, and Hero MotoCorp, which gained fresh ground.
General CVs see moderate growth
In the commercial vehicle (CV) category, dispatches were helped by improving demand for medium and heavy trucks. Ashok Leyland maintained its lead in MHCVs, growing faster than Tata Motors. However, retail sales in this segment declined by 4% YoY, reflecting caution in the market.
General Tractors see robust growth
The tractor segment bucked the trend. Escorts reported a strong 24% growth in dispatches, helped by good monsoon progress and rural liquidity. M&M also posted modest gains. The sector is showing signs of revival after several subdued months, driven by healthy Kharif sowing activity.
General Business outlook
Looking ahead, Emkay Global says the upcoming festive season will be crucial for demand recovery. Possible tax incentives and interest rate cuts could help lift sentiment. The brokerage remains optimistic on select names like TVS Motor, Eicher Motors, Maruti Suzuki, and auto component players such as Shriram Pistons, Craftsman Automation, and CEAT.