August Auto Sales Review: Retail Increases as Holiday Season Enters; Demand stable for PVs/CVs


August Auto Sales Review: Auto retail sales rose about 7 percent in August and 3 percent mom (MoM) in the consumer-facing segments of PV/2W (cars and two-wheelers) after consolidating for five straight PV months, the domestic brokerage firm said ICICI Securities.

While the CV (commercial vehicles) segment was flat month-on-month, gradually recovering to the March-April 2022 highs even in a seasonally low month, the brokerage further explained in its auto sales review for the previous month.

Tractor registrations also saw a drop of around 18 percent MoM in August, albeit on a higher basis. In the EV segment, volumes were up 13 percent MoM in 2W at 50,000 units, matching March 2022 highs of 50,000 units, the broker noted.

However, EV sales in the PV category declined slightly by 4.6 percent MoM, mainly due to the expectation of new launches in the affordable EV segment in the coming months, barring the impact of the multiple registration holiday in August, according to ICICI Securities.

Key takeaways from August auto sales: India’s mobility data continues to lead in both transit mobility and workplace mobility, with offices and schools reaching normality, ICICI Securities said, adding that global mobility data weakened as key regions face macroeconomic challenges stand, for example Europe, USA .

According to another brokerage firm, Motilal Oswal, wholesale prices on August 22 for 2Ws and tractors were in line, while those for PVs and CVs were below estimate.

PV wholesale trade was sequentially flat as model launches and order backlog from OEMs (original equipment manufacturers) will help sustain PV demand, and domestic 2W wholesale trade has started to rise while exports remain under pressure, the added agent added.

Year-on-year, August volumes for 2Ws/PVs/CVs/3Ws/tractors increased 8/43/16/28/2 percent, respectively, Motilal reported.

While the easing of semiconductor supplies boosted PV retail and rising economic activity and higher capacity utilization boosted CVs, the 2W segment has yet to recover given high operating costs, Motilal Oswal mentioned in his report.

The brokerage firm favors 4Ws over 2Ws due to strong demand and a stable competitive environment and expects momentum to continue in the CV cycle. He favors companies with better visibility into demand recovery, strong competitive positioning, margin drivers and balance sheet strength.


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