Divergent trends in May wholesales

The Indian auto industry continues to see divergent volume trends across segments. We estimate that May wholesales, versus 2019, grew 22% for PVs, 39% for tractors and 4% for trucks, but fell 28% for 2Ws. TTMT stood out with wholesales 82% above 2019; MM/MSIL were 20-28% higher, AL/TVSL/EIM (RE) were within +/-2%, but BJAUT/HMCL were 25-34% lower. Compared to our estimates, volumes were better for HMCL/AL, lower for BJAUT and in line for the rest.

PVs doing well: Passenger vehicle (PV) industry witnessed a good May with wholesales rising ~22% over May 2019. Comparisons to 2021 and 2020 are not very meaningful as Covid impacted volumes for the last two years. PV registrations were also 11% higher than 2019.

Both Maruti and Mahindra mentioned that volumes remain impacted by supply chain issues. As per the dealer association, channel inventory was flat m-o-m at 15-20 days in April and remained below the normal level of 4-5 weeks. Tata reported another strong month with domestic PV wholesales at 3.5x of May 2019; its domestic PV volumes surpassed Hyundai (NC) for the second time in the last 6 months. Tata’s EV volumes grew 49% m-o-m. Mahindra’s SUVs were also 29% higher than May 2019 while domestic wholesales for Maruti and Hyundai were similar to May 2019.2Ws relatively weak but holding up: We estimate that domestic 2W wholesales, excluding Honda where volumes are awaited, were 28% below May 2019 but up 11% m-o-m (better than the historical seasonality).

Retails followed a similar trend with May registrations down 14% versus May 2019. Domestic wholesales were 53% below May 2019 for Bajaj, 19-27% lower for TVS and HMCL and 11% lower for Royal Enfield (RE). 2W exports declined c.11%  y-o-y in May with volumes falling 15% for Bajaj and 7% for TVS. Strong month for tractors; trucks decent: Tractor industry wholesales in May were ~39% above 2019 while registrations were 28% higher. Both Mahindra and Escorts highlighted rural sentiment is positive, driven by good crop realisations and forecast of a normal monsoon.

We estimate that truck industry wholesales were ~4% above May 2019, and the m-o-m decline was less than the historical seasonality. Truck registrations in the month were 6% below 2019; however, e-way bills, a measure of road freight movement, remained strong with 28% y-o-y growth in April (43% above April 2019).