scorecardPV and 2W sales disappoint in December, but stronger growth ahead, say analysts
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PV and 2W sales disappoint in December, but stronger growth ahead, say analysts

PV and 2W sales disappoint in December, but stronger growth ahead, say analysts
Business3 min read
Better days ahead for car and two-wheeler makers, say analysts    Canva
  • Passenger vehicles and two-wheeler sales in December fell sequentially after a blockbuster November.
  • Analysts expect the upcoming quarter to witness strong growth as Q4 is seasonally strong and auto companies have a slew of new launches planned.
  • Analysts say they remain positive on the auto industry’s prospects going forward, with its choices being CVs, PVs and two-wheelers, in that order.
Passenger vehicle and two-wheeler companies ended 2022 with a dismal sales performance in December, registering double-digit degrowth sequentially after a blockbuster November.

However, analysts expect the upcoming quarter to witness strong growth, both due to the fact that Q4 is seasonally strong as people look to buy new vehicles at the beginning of a year. Added to that, new launches, refreshed models and a good monsoon season leading to possibly healthy rural demand — are driving up expectations of a better good quarter ahead.

On the other hand, commercial vehicles and tractors drove the December auto sales, witnessing double-digit sequential growth across all segments thanks to a robust Rabi season and expectations of a healthy Kharif season.


Maruti Suzuki continues to struggle



Market leader Maruti Suzuki continued to struggle, with its domestic sales and exports both declining on a year-on-year basis, by 10% and 2%, respectively. Its overall sales also declined on a sequential basis, falling 11.9% to 1,37,822 units in December 2022 from 1,50,134 units in November.

The company’s customers are continuing to shun its small cars like Alto, Baleno, Swift and others in the mini, compact and mid-size segments. The total sales in these three segments fell to 68,421 units in December 2022, from 86,869 units in December 2021.

“The shortage of electronic components had some impact on the production of vehicles, mainly in domestic models,” the company said in its exchange filing.

Some of these problems are expected to ease up, hope analysts at LKP Securities. “We believe the fourth and the last quarter of the year will witness stronger growth in the PV segment as the chip shortage issue eases further and new launches on both ICE (internal combustion engine) and EV sides do take place,” they said.

The brokerage said it remains positive on the auto industry’s prospects going forward, with its choice being CVs, PVs and two-wheelers, in that order.

Commercial vehicles and tractors are already performing well, reporting strong growth in December on both year-on-year as well as on a sequential basis.

Two-wheeler sales decline across the board, but 2023 could ring in positives



Two-wheeler sales were also muted during the month, with exports shrinking massively in the range of 23-39% across the top three two-wheeler companies Hero MotoCorp, TVS Motor and Bajaj Auto.

The fall in exports was especially bad for Bajaj Auto, which reported a 39% fall during December. It relies far more heavily on exports than both Hero MotoCorp and TVS – its exports accounted for nearly half of its total sales in December. for TVS, exports stood at 33% of total sales, while Hero exported merely 3% of its total sales.

According to analysts at LKP Securities, this also shields Hero from the exports weakness, which means it is the best placed to take advantage of Q4.

“We like Hero Motocorp as we believe it is almost free from the exports weakness and is also led by strong monsoons barring a few eastern states, improvement in rural economy and upcoming EV launches,” the brokerage said in its report.

Analysts at ICICI Direct Research say they expect the premiumisation trend in the 2W segment to continue going forward. Additionally, with the Auto Expo scheduled for February this year, auto companies are expected to launch new vehicles, which should give a boost to their sales volumes.

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