October auto sales: No special festive boost

Here is a quick look at the overall volumes sold in the month of October 2021, inclusive of exports:

PVs & CVs In Focus:

Passenger vehicle wholesales, which declined a little over 15% YoY, are expected to improve further, Motilal Oswal said in a note. ‘s export volumes in October were at a record high as it grew 122% YoY & 12% MoM to 21,322 units. “Demand for vehicles across our portfolio remains robust. Exports remain strong, with a 57% increase,” Veejay Ram Nakra, CEO of Mahindra & Mahindra’s Automotive division said.

Passenger vehicles & tractor wholesales pipped the Motilal Oswal estimates, tractors were in-line, the brokerage said.

Overall, data on the passenger vehicles front hinted towards easing of the semiconductor shortage issue. Speaking on the lingering concern, Maruti Suzuki’s ED Shashank Srivastava said “I believe we have passed the bottom part of the curve as far as supply is concerned. The situation as far as the semiconductor supply is concerned is still very dynamic.”

In a stock exchange filing, Maruti said that the shortage of electronic components continued to affect the production of vehicles in October but the company managed to sell more vehicles than the sales volume expected at the start of the month.

Analysts expect the semiconductor shortage to be a spot of bother in the second half of the fiscal as well although improvement may be seen in supplies over Q2FY22 levels. Motilal Oswal expects the commercial vehicle cycle to gather momentum in H2FY22 and has reiterated that Maruti Suzuki and Ashok Leyland are its top picks.

Tractors In Focus:


“Monsoon, though normal at the cumulative level, has been back-ended with heavy rainfall in September and October. This has resulted in delayed harvesting of the Kharif crop while leading to higher reservoir levels and moisture content of the Rabi crop. The expectation of a good Kharif harvest, coupled with good preparations for Rabi crop and upcoming festivities, will boost positive sentiment and drive demand in coming months,” Hemant Sikka, President, Farm Equipment Sector, M&M said.

Eicher Motors has noted that the unabated inflation in commodity prices is putting pressure on the company’s margin and that it is an area of concern.

2-Wheelers & 3-Wheelers In Focus:

The 2-wheelers saw a YoY decline of more than 20% hinting at weak demand during festivals of Navratri & Diwali. Hero MotoCorp said, “Demand in the festive season has been building up as we move towards Dhanteras and Diwali, and we expect healthy retail over the coming weeks.”

Wholesales of Hero MotoCorp, , Motor & Royal Enfield were below Motilal Oswal’s estimates, with inventory days at 45-60 days. The brokerage prefers 4-wheelers over 2-wheelers on the back of strong demand and a stable competitive environment.

Anshul Saigal, CIO, Kotak Mahindra AMC sees good days ahead for the auto space in general. “In the two-wheeler space, the situation is slightly complicated because there is a two-wheeler EV market which is looking to be becoming quite a vibrant market over the next say one to three, five years and we will need to see who will have the right to win in that space. The market remains a little complicated but the passenger vehicle market looks to be doing quite well,” he adds.

Saigal anticipates that in the next 6 to 12 months, there will be a slew of new launches from various companies as also the leader in the market, particularly the passenger vehicle market. That should spur growth in this space over the next 6 to 12 months, he says.