June Auto Sales Preview: Seasonal Weakness Expected With Select Outperformers

Retail sales is likely remained subdued in June for most auto manufacturers barring select outperformers as heatwaves reduced footfalls and inquires across product categories, brokerages said.

Monthly sales data of automakers for June are set to release starting Monday.

Two-wheelers are expected to show degrowth of 10–15% in June from a month ago amid the absence of marriage dates, according to multiple brokerages.

Given the presence of multiple brands across different categories, brokerages expect TVS to outperform its peers this month as well. They anticipate a roughly 9% increase in volumes compared to the same month last year. The only category in which it has not yet shown growth is the premium category, competing with the likes of Honda Motors, which has substantially solved all its supply chain issues.

Bajaj Auto has also borne the brunt of Honda Motors' recovery, but in the 125cc space, it has the Pulsar as one of its main products and competes with the Honda Shine 125.

The lack of rural recovery and heatwaves will continue to impact Hero MotoCorp's volumes, with brokerages expecting a single-digit drop in sales compared to last year.

Royal Enfield has had a subdued start this financial year and is expected to report degrowth in sales both year-on-year and sequentially.

Mahindra and Mahindra Ltd. continues to show strong growth, outperforming its peers. Strong product launches such as the 3XO, along with rising monthly production, have led to a consensus brokerage estimate of 15% growth, a development that has positively surprised some banks. Estimates indicate that the entry-level or base variant of the 3XO has a waiting period of roughly 32 weeks, indicating widespread acceptance of the product.

Maruti Suzuki and Tata Motors continue to show lower growth compared to last year, but interestingly, brokerages are seeing different sales strategies from both. Maruti has increased discounts on its models, while Tata Motors has lowered discounts on a few of its models.

New launches for both of these players this fiscal will be key to reviving growth. Tata Motors is expected to launch the new Curvv and Sierra in the mid-SUV space, while Maruti Suzuki launched the new Swift in May, which is seeing good growth. The commentary on Swift's performance will be closely watched.

Commercial vehicles are likely to repeat their May sales trend with mid-single-digit growth on both a year-on-year and sequential basis, brokerages said. The recovery has been slow, and an underlying weakness in categories like tipper and cargo, along with some commentary on the same post-quarter-one results, would be key.

Tata Motors has seen a good response to its ACE EV, and speaking to NDTV Profit, the company also highlighted this year's recovery compared to the previous year.

Ashok Leyland's push for light commercial vehicles is key to competing with Tata Motors in this space. It has also launched its product here to compete with the ACE EV, but brokerage channel checks in Uttar Pradesh suggest that these are taking some time to ramp up.

Eicher VECV surprised positively last month and is expected to report the highest growth on a year-on-year basis amongst all three listed CV players.

Tractor may continue their downturn, witnessing a 20–25% year-on-year decline in retail sales, but the expectations of better sequential growth are the only positive.

Both M&M and Escorts experienced a decline in growth during the previous fiscal and have projected a recovery in the second half of the current fiscal. They are hoping for positive shifts from good monsoons, rural recovery, and budget support for their customers in July.

Notable decreases in states like Uttar Pradesh and Maharashtra, where the monsoon has not yet begun, are negative, and commentary on states like Karnataka, where demand has been subdued, will be key post-quarter-one results.

Mahindra has been strong in maintaining market share with timely launches and product acceptance for brands like Oja, while Escorts is expecting better performance in states like Maharashtra and Karnataka this year.