Two-wheeler sales grow in mid-to-high single digits during Navratras, rural sales muted: Report

Sales of two-wheeler segment: Two-wheeler retail sales during Navratras grew by mid-to-high single digits across regions even as rural sales have remained muted, a broker firm said in a report on automobile sector on Thursday.

report by Motilal Oswal Financial Services also said that during last week of October, inquiries and bookings are seeing a slight improvement for passenger vehicle OEMs (original equipment makers) especially for Maruti Suzuki and Tata Motors.

"We observed varied demand trends in October, with two-wheelers and tractors showing positive momentum and passenger and commercial vehicles witnessing moderate demand. A better monsoon is helping drive positive sentiment in rural regions, though sustainability of this demand remains to be seen," broker firm said.

Overall, two-wheelers performed better, with festive growth expected at 4-5 per cent year-on-year partially constrained by a high base, it said.

At same time, passenger vehicles may see a fall in festive season compared to last year, it said, adding that inventory levels are currently high for both two-wheelers and passenger vehicles, making Diwali sales a critical period to gauge inventory clearance.

Tractor volumes are recovering and are expected to perform well in second half of current financial year. In commercial vehicles, sentiment improved sequentially, driven by demand in certain industries, though a full recovery remains distant, it stated.

Overall, broker firm said, it expects dispatch growth for two-wheelers and tractors at 12 per cent and two per cent respectively while for three-wheelers at 5 per cent.

However, passenger vehicles are expected to see a flat growth in volumes while commercial vehicles volume may see a 4 per cent year-on-year dip, as per report.

It ted that retail sales during Navratras grew by mid to high-single digits across regions we interacted. Rural sales have remained muted during Navratras but are expected to improve during Diwali , it said that during last week of ongoing month, inquiries and bookings are seeing a slight improvement for PV OEMs, especially for Maruti Suzuki and Tata Motors.

According to broker firm, weakness in commercial vehicle demand persisted even during festival with volumes expected to decline by around 5 per cent year-on-year.

However, situation still seems better than last month as an improvement in fleet utilisation levels in most of regions was ted during month, it stated.

Stating that it observed improvement in tractor demand, with volumes expected to grow 2-4 per cent year-on-year despite delayed monsoon, broker firm in its report said that key states like Maharashtra , Karnataka, Telangana, and Andhra Pradesh experienced a roughly two-week delay in harvesting due to monsoon impact.

However, dealers in sourn regions have reported encouraging demand recovery in October. On or hand, demand in rrn regions is yet to catch up and same is expected to materialise next month, broker firm said.

Additionally, government's recent MSP increase by around 6 per cent for key crops like wheat, barley, and gram for next fiscal year should support positive sentiment in tractor and rural markets, it ted.