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The strong growth in Automobile whole sale numbers for the month of February continued to be led by two-wheeler OEMs (Original Equipment Manufacturers) while performance by rest of segments remained a mixed bag.

The Passenger Vehicles wholesales growth rate though firm was significantly lower than the two-wheelers. The commercial vehicle sales declined a bit while Tractor sales saw strong degrowth.

“The Indian auto industry witnessed a wide divergence in wholesale growth across segments in February with volumes rising 35% YoY for two-wheelers and 11% for Passenger Vehicles, but falling 14-18% YoY for trucks/tractors” said analysts at Jefferies India Pvt Ltd in their auto numbers review report.

Two Wheelers continued their stellar show In February

“February’ 2024 two-wheeler wholesale volumes grew by strong double digits, above our expectations due to more-than-anticipated retails (up 13%) and channel filling (especially Honda two-wheelers)” said analysts at Anand Rathi research in their review.

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While Based on volumes reported by OEMs, Jefferies estimate domestic two-wheeler wholesales rising by 35% YoY in February, which was the fifth consecutive month of more than 15% growth (yer-to-date-FY24: 13%), even export volumes showed a strong trend and grew around 45% YoY in February. TVS Bajaj Auto reported the highest 24-33% YoY growth.

“Versus our estimates, volumes were better for TVS Motor Company and Hero MotoCorp and mostly inline for others”, said analysts at Jefferies.

Steady show by Passenger vehicles

The domestic passenger Vehicle industry wholesale volumes growth of around 11% is likely to have been driven by steady demand trends and channel filling, said analyts. The retail sales during the month are likely to have grown in the high single digits.

Maruti Suzuki (India) Ltd domestic volumes rose 9% year-on-year in February 2024, led by strong growth in the SUV segment, partly offset by a decline in hatchback and sedan segment volumes. Analysts at Kotak Institutional Equities said that “as per our estimates, Maruti Suzuki’s wholesales market share stood at 42.8% (down 120 bps year-on-year)”. Tata Motors reported a 19% year-on-year improvement in Passenger Vehicles volumes, whereas Mahindra & Mahindra volumes increased by 40% year-on-year in February 2024.

Soft performance by Commercial Vehicles.

Domestic Commercial Vehicle segment volumes declined in the low single digits year-on-year, which came in line with our expectations, said analysts at Kotak Institutional Equities.

Tata Motors’ domestic CV volumes declined by 4% yoy, led by a 12% yoy decline in the Medium and Heavy commercial vehicle sales. SCV cargo and pickup segment also reported a 4% yoy decline in sales that were partly offset by a 29% yoy increase in the bus segment.

Ashok Leyland reported a 6% yoy decline in volumes in February 2024.

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Weak Show by Tractors

We estimate that tractor wholesales fell 18% year-on-year in February (year to date FY24: -6%), said analysts at Jefferies. M&M mentioned that agricultural sector is under stress in southern and western states due to erratic and deficient monsoon.

Analysts at Kotak Institutional Equities attributed decline in tractor sales to weakness in southern and western markets due to diminished kharif output and lower rabi sowing. However, improved rabi sowing and a normal monsoon forecast for next year should support demand recovery in the coming months, they added


Analysts remain confident of good sales performance by Auto OEMs in the two wheeler and passenger Vehicles space as we move forward.

Ahead, we expect good volume trajectories for two wheelers and Passenger Vehicles with the wedding/ festival seasons and rise in government’s pre-election spending, said analysts at Anand Rathi. CVs and tractors would be muted in the near term due to the high base, tehy added. They retain optimistic view on the auto sector and preferred OEM picks are Hero MotoCorp and Escorts Kubota.

TVS Motor and Eicher Motors, followed by Bajaj Auto and and Tata Motors are preferred Buys of Jefferies in the auto space.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

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