Auto Sales Preview: Two-Wheeler Demand Sustains In November After Festive Surge On Rural Recovery

The momentum in demand for two-wheelers sustained even after the festive season due to a recovery in the rural areas, according to analysts.

While the first half of November witnessed robust growth in two-wheeler sales, the improvement in demand has continued across regions, with even the entry-level segment on the recovery path, they said.

This may mark the recovery of the two-wheeler market, particularly in rural areas, after a disproportionate rise in prices led to muted growth for years.

"While growth tends to slow down post-festival season, 2W (two-wheeler) demand is still better as we expect 5–7% YoY growth in the second half of the month," Motilal Oswal said in a note on Wednesday.

The brokerage said the demand has improved in almost all the regions and dealers expect the momentum to continue, supported by the wedding season. 

In the passenger vehicle category, the slowing sales of entry-level cars and declining order books are expected to pull down the overall sales growth to low single digits.

Nomura Holdings Inc. expects discounts on passenger vehicles to hit a three-year high in December, as current inventory remains elevated at dealerships.

"We maintain our view that production will need to be reduced voluntarily for the first time since the Covid era in November and December," it said. The brokerage expects significantly higher discounting in December than the past three years to clear off this stock.

Sales of commercial vehicles are likely to rise in November, showed an average of estimates from Motilal Oswal, Nomura and Dolat Capital.

The moderating post-festive freight demand and slowing government-based orders due to state elections may have limited sales during the month, Motilal Oswal said.

Despite an estimated fall in retail sales, the tractor dispatches to dealerships may see growth in November, according to the compiled estimates.