Automobiles & Auto Components share price target

Domestic 2W retails in May’23 (1.5mn units) were up ~9% YoY and up 21% MoM, post a dull April’23, with continuation of marriage season and improving rural sentiment. e-2W retails crossed 100k mark in May post a weak April at 66k units, we believe, driven by pre buying on account of pre-empted price hikes on partial subsidy removal.

Maruti Suzuki’s overall wholesale volumes for the month of May 2023 increased by 10.3% YoY/ 10.9% MoM. Total Domestic sales grew by 13.0% YoY/ 5.6% MoM. Exports declined by 2.6% YoY but saw a significant uptick of 56.0% MoM.

Auto Monthly Volume May 2023

Hero Motocorp (HMCL) has reported volume increase of 7%/31% YoY/MoM at ~519k units in May’23. Motorcycle sales volumes increased 8%/33% YoY/MoM at ~489k units vs scooters, which decreased 13% YoY (although 10% higher MoM) at ~30k units.

Retail sales for the automobile industry as a whole declined by 4% YoY to 17.2 lakh units in April 2023. Two-wheeler retail sales went down 7.3% YoY to 12.3 lakh units, while car retail sales dropped marginally by 1.3% YoY to 2.8 lakh units.

On a year-on-year basis, losses were seen across the two-wheeler and passenger vehicle segments, while the other segments saw growth in sales.

Automobile wholesales of listed companies rose 17.7% YoY to 12.4 lakh units in April, while exports fell 38.5% YoY to 1,97,384 units.

Domestic two-wheeler wholesales of listed companies went up 19.8% YoY to 8.7 lakh units, while that of passenger vehicles increased 17.7% YoY to 2.2 lakh units.

Maruti Suzuki’s total volumes for the month of April 2023 increased by 6.5% YoY but declined by 5.6% MoM. The sequential decline was led by exports which declined by 43.7% MoM on a very high base of March-23. Exports were also lower YoY by 7.8%.

Domestic 2W retails in Apr’23 (1.23mn units) were down ~7% YoY as festivities (Navratri) was in March this year vs in April in CY22. Other than this factor, we do not see much deviation in the trend of gradual recovery in overall domestic 2W retails, including rural.