Analysing Auto Sector Performance: Strong Showing Across Segments

Positive Performance Across Key Segments

In February 2024, the automotive industry witnessed robust volumes, primarily driven by Passenger Vehicles (PVs) and Two-Wheelers (2Ws). PV volumes surged by 18% year-on-year (YoY), while 2W volumes grew by an impressive 24% YoY. Notably, the Three-Wheeler (3W) segment also recorded a healthy growth rate of 16% YoY. This uptrend was supported by strong exports, particularly in the context of the Red Sea crisis, prompting OEMs to engage in aggressive channel filling.

PVs: Sustained Demand and Export Growth

PV OEMs reported strong volumes, surpassing estimates and growing by approximately 18% YoY. Maruti Suzuki led the growth trajectory, driven by robust demand across premium segments. Additionally, exports for Maruti Suzuki reached record levels, reflecting strong international demand. Other OEMs like M&M and Tata Motors reported decent volumes, supported by new launches and robust order books.

2Ws: Exceeding Expectations with Export Surge

2W volumes outpaced estimates by 10%, primarily due to higher-than-expected exports. Overall, the segment witnessed a 24% YoY growth rate, with TVS leading the pack with a 35% YoY increase. Hero MotoCorp also posted impressive volumes, buoyed by a recovery in entry-level demand and strong export performance. Bajaj Auto and Royal Enfield also reported volumes ahead of expectations, driven by overseas performance and signs of improvement in exports, respectively.

Challenges in Commercial Vehicles (CVs) and Tractors

In contrast, Commercial Vehicles (CVs) faced challenges, with volumes remaining flattish YoY. While the Light Commercial Vehicle (LCV) segment showed signs of gradual recovery, the Medium and Heavy Commercial Vehicle (MHCV) segment experienced a slowdown, attributed to factors such as pre-election uncertainty and higher interest rates. Tractor volumes also remained muted due to seasonality effects and a higher base, although OEMs anticipate positive demand indicators from good Rabi sowing and government incentives.

Conclusion

Despite challenges in certain segments, the automotive sector continues to demonstrate resilience and adaptability. Strong performance in PVs and 2Ws, coupled with positive growth expectations in CVs and tractors, indicate a promising outlook for the industry. OEMs are leveraging export opportunities and new launches to capitalise on market demand, reaffirming their commitment to sustained growth and profitability.

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