Automotives - Post-Festive Inventory Destocking Impacts Wholesales Across Segments: ICICI Securities

ICICI Securities Report

With the piling up of inventory in August-October 2023 period along with lower production days in December 2023, auto wholesale numbers were subdued and largely in line with expectations in passenger vehicle, two-wheeler segments.

In medium and heavy commercial vehicles, volume continued to surprise negatively, both in retail and wholesale terms, despite this being a seasonally strong period, with Ashok Leyland Ltd. plus Tata Motors Ltd. combined volume being flat YoY.

Tractor wholesales declined ~17% YoY for both Mahindra and Mahindra Ltd. and ESC. In domestic two-wheelers, volumes of Bajaj Auto Ltd. / TVS Motors Ltd. were up 15% / 27% YoY, respectively, whereas Royal Enfield volume was down 7%.

Maruti Suzuki India Ltd.’s wholesale was down 1% YoY at ~138,000 units, with PC segment down ~30% YoY and utility vehicle segment up ~40% YoY.

We expect de-stocking led lower wholesales to persist and impact absolute volume and growth for both PVs and two-wheelers until January 2024.

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