August Auto Sales: M&M, Bajaj Auto May Lead, Maruti Suzuki Likely To See Decline, Says Nuvama

The sales figures of leading automakers for the month of August may show a mixed trend, according to Nuvama. While the two-wheeler and tractor segments are likely to show growth, passenger vehicles and commercial vehicles may see a dip in August 2024, according to the brokerage.

Mass-market original equipment manufacturers, including Honda Motor Co., Hero MotoCorp Ltd., Bajaj Auto Ltd. and TVS Motor Co. may perform well in August, the brokerage said in a note. On the other hand, Royal Enfield maker Eicher Motors Ltd. is likely to witness a flat performance. 

In the passenger vehicles segment, analysts are expecting a mixed bag. Mahindra & Mahindra Ltd. will likely see growth but Maruti Suzuki India Ltd. may witness decline on a high base from the previous year due to the festive season (Onam) starting early in 2023. 

Nuvama's top picks among OEMs include Mahindra & Mahindra, Bajaj Auto and Escorts Kubota Ltd. “Over FY24–26E, we believe two-wheeler/tractor volumes would grow in high single digits vis-à-vis low-single digits for PV and CV,” it said.

Analysts are expecting two-wheeler industry volumes to grow at around 8% year-on-year in the domestic market. This is due to strong rural demand and continuing urban demand. Better sentiments due to a normal monsoon this year may also push rural sales even more. 

Ahead of the upcoming festive season, wholesales are expected to be higher than retail sales, as dealers continue to build inventory.

“We reckon total volume growth at 10% for TVS Motor to 3.8 lakh units, 7% for Bajaj Auto to 3.65 lakh units and 4% for HMCL to 5.1 lakh units. In comparison, we anticipate Eicher Motor-Royal Enfield to be flat at 77,500 units,” Nuvama said in its note.

Meanwhile, the passenger vehicles industry may see a slight decline in its volume, at around 3% YoY in the domestic market. Last year, the festive season (Onam) commenced earlier as compared to this year, which may result in a muted volume performance in August. However, Mahindra & Mahindra is likely to show a robust growth of 13%, outpacing Maruti Suzuki and Tata Motors passenger vehicles. 

This year, vehicle discounts are also higher as compared to last year across companies. PVs like Maruti Dzire Petrol, Mahindra Thar, Bolero, Tata Tiago and more are on much higher discounts than earlier.

“We anticipate total volume growth of 1% for MM-Auto (Mahindra & Mahindra Auto) (includes PV, CV, 3W) to 71,000 units while we expect a 6% decline for MSIL (Maruti Suzuki) to 1.53 lakh units and 2% for TTMT-PV (Tata Motors Passenger Vehicles) to 44,850 units,” the note by Nuvama said.

Owing to a high base for cargo vehicles compared to last year, there may be a 4% YoY decline in the industry volumes of commercial vehicles. In positive news, e-way bill generation has been higher than last year. This may indicate a better availability of freight for transporters. In July 2024, 3.4 million e-way bills were generated, as compared to 2.8 million e-way bills generated in July 2023, as per Nuvama Research. 

Analysts are expecting a total volume growth of 7% for Eicher Motors-VECV to 690 units. Meanwhile, Ashok Leyland is expected to exhibit a flat growth to 15,600 units. Tata Motors CV, however, is expected to decline 4% to 30,650 units.

The tractor industry volumes are expected to witness a slightly positive growth of about 4% YoY, according to Nuvama. Normal monsoons this year have resulted in positive farmer sentiments, which is likely to be a positive sign for tractor sales. 

Positive terms of trade in recent months, with output inflation being higher than input inflation, will also help with a favourable growth according to analysts. Total volumes are likely to grow by 8% for Mahindra-Farm to 23,400 units. On the other hand, Escorts volume will grow to 5,700 units at 2%, Nuvama estimates.