October sales for automobiles is expected to be eventful as it’s the peak festive period led by inventory buildup by most brands anticipating a strong growth. This month is expected to show growth for most two wheeler players but pockets of growth will be visible from players like Escorts. M&M is expected to continue its growth momentum growth. Brokerages anticipate better trends in second half for most subsectors.
Two-Wheeler Space: Royal Enfield Expected To Show Growth, Finally!
Eicher Motors Ltd.'s Royal Enfield and Hero MotoCorp Ltd. will be in focus this month, as they are expected to report strong sales numbers for the month of October. This will be the first with positive double-digit growth for the company, and the company seems to be building inventory on expectations of the festive season.
Nuvama says season demand has been strong, with higher growth in rural areas while north/west regions have outpaced the south region.
Hero MotoCorp’s number in the festive season is noteworthy, as the company expects to build up at least 10% of its inventory for the year in the month of Diwali. This time as well, the company, which sold roughly 56 lakh bikes last year, is expected to wholesale 6.4 lakh vehicles, growing 10% compared to last year.
TVS is expected to continue its steady low-digit growth, while Bajaj will have a soft month due to growing 20-25% in the last two months.
According to Nomura, two-wheeler industry wholesales are likely to be up 7% on a yearly basis. Nomura’s industry checks indicate slowing demand trends in two wheelers as well.
Passenger Vehicles: New Addition Of Hyundai To Previews; M&M Expected To Lead Growth
Hyundai India listed this month, and we will be adding the company going forward to our previews. The company is expected to report flat-to-negative performance compared to last year, a trend visible for Maruti and Tata Motors as well.
Maruti Suzuki India Ltd. said in its quarterly earnings call in October that festive season growth is 14% year-on-year, including the inauspicious period of Shraddha this time to offset the month-end effect, which helped stocks react positively despite tepid, weaker numbers.
Mahimdra & Mahindra Ltd. continues to be the leader with strong growth yet again compared to last year. The Thar Roxx and 3XO have been doing well, with the waiting periods getting lower as production increases.
Commercial Vehicles: The Dull Trend Continues
Commercial vehicle makers had anticipated a stronger second half compared to the first, but that trend won’t be visible. Lack of government spending and capital expenditure on infrastructure projects is a key reason for subdued demand. But Nuvama said that on the positive side, e-way bill generation has been higher than last year, indicating better freight availability for transporters.
Tata Motors is expected to show a 10% fall in sales this month, continuing its downward trend for the first half of the ongoing financial year, which is set to end on March 2025. The sales for the company fell 7% during the first half of fiscal 2024–25.
VECV and Ashok Leyland are expected to show flat to negative sales growth this month.
Another potential reason has been higher utilisation of current trucks by fleet operators, which is expected to only pick up post-government’s infraspend.
Nomura expects a gradual recovery for MHCVs, as government spending will likely improve in the second half of this fiscal. In the ongoing financial year, they expect MHCV industry growth of 5% compared to last year, to which they see a downside risk.
Tractors: Escorts Expected To Post Growth
Tractors are expected to report positive growth due to improving farmer sentiments owing to surplus rainfall, better Kharif production, and favourable terms of trade.
Escorts Kubota has shown flat sales in the first half of this fiscal year, while its peer M&M has grown 5% in the same period. This month, the company is expected to grow 10% in sales. M&M has outperformed industry growth led by stronger demand trends in the western markets of the country.
Nomura forecasts 5% industry growth in the ongoing fiscal.
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