August Auto Sales Review: Retail Sales Rise as Holiday Season Begins; stable demand for PV/CV

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August Auto Sales Review: Auto retail sales in August were up around 7 and 3% month-on-month (MoM) in the PV/2W segments (passenger vehicle and two -wheels) to consumers after PV consolidated for five straight months, national brokerage ICICI Securities said.

While the CV (commercial vehicle) segment was stable on a MoM in August and gradually recovering to March/April 2022 highs, even in a seasonally low month, the brokerage further stated in its review of auto sales for the previous month.

Similarly, tractor registrations were down around 18% m/m in August, but on a higher basis. In the EV segment, volumes rose 13% MoM in 2W to 50,000 units, matching March 2022 highs of 50,000 units, the brokerage noted.

However, sales of electric vehicles in the PV category were down slightly by 4.6% month-on-month, mainly due to anticipation of new launches in the affordable electric vehicle segment in the coming months, in addition to the impact of multiple recording holidays in August, according to ICICI Securities.

Key Takeaways from August Auto Sales: Mobility data from India continues to lead in both public transport and workplace mobility with offices and schools reaching normalcy, ICICI Securities said, adding that global mobility data has weakened as key regions face macroeconomic challenges, e.g., Europe, the United States.

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

PV wholesales were flat sequentially as model launches and OEM (Original Equipment Manufacturer) backlog will help support PV demand, and domestic 2W wholesales began to pick up, while that exports remain under pressure, the brokerage added.

Year-on-year, volumes for 2W/PV/CV/3W/Tractors increased by 8/43/16/28/2% respectively in August, Motilal reported.

While the easing of semiconductor supply boosted PV retail sales and increased economic activity and rising capacity utilization propelled CVs, the 2W segment did not has yet to recover in a high cost of ownership, Motilal Oswal mentioned in its report.

The brokerage favors 4W over 2W due to strong demand and a stable competitive environment and expects the CV cycle momentum to continue. He prefers companies with greater visibility in terms of demand recovery, strong competitive positioning, margin generators and balance sheet strength.

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