Divergent May Wholesale Trends

The Indian automotive industry continues to see diverging volume trends across segments. We estimate that May wholesale sales, compared to 2019, were up 22% for PVs, 39% for tractors and 4% for trucks, but fell 28% for 2Ws. TTMT Stands Out With Wholesale Sales 82% Above 2019; MM/MSIL were 20-28% higher, AL/TVSL/EIM (RE) were +/- 2%, but BJAUT/HMCL were 25-34% lower. Compared to our estimates, volumes were better for HMCL/AL, lower for BJAUT and consistent for the rest.

PV is doing well: The passenger vehicle (PV) industry had a good month in May with wholesale sales up around 22% compared to May 2019. Comparisons with 2021 and 2020 are not very significant as Covid has impacted volumes over the past two years. PV registrations were also 11% higher than in 2019.

Both Maruti and Mahindra mentioned that volumes remain affected by supply chain issues. According to the dealer association, channel inventory was flat at 15-20 days in April and remained below the normal level of 4-5 weeks. Tata reported another strong month with wholesale domestic PV sales at 3.5x from May 2019; its domestic PV volumes surpassed Hyundai (NC) for the second time in the last 6 months. Tata’s electric vehicle volumes increased by 49% mum. Mahindra’s SUVs were also 29% higher than May 2019, while Maruti and Hyundai’s domestic wholesale sales were similar to May 2019, up 11% mom (better than historical seasonality).

Retail sales followed a similar trend with May registrations down 14% from May 2019. Domestic wholesale sales were 53% lower than May 2019 for Bajaj, 19-27% lower for TVS and HMCL and 11% lower for Royal Enfield (RE). 2W exports were down around 11% year-on-year in May, with volumes down 15% for Bajaj and 7% for TVS. Good month for tractors; Decent Trucks: Tractor industry wholesale sales in May were about 39% higher than 2019, while registrations were 28% higher. Both Mahindra and Escorts stressed that rural sentiment is positive, driven by good harvest achievements and the expectation of a normal monsoon.

We estimate that truck industry wholesale sales were about 4% higher than May 2019, and the mom’s decline was less than historical seasonality. Truck registrations in the month were 6% lower than in 2019; however, electronic freight bills, a measure of road freight movement, remained strong with 28% year-on-year growth in April (43% from April 2019).

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