Pickup in commercial vehicle sales in November

Mumbai: Commercial Vehicles (CVs) should maintain positive momentum in November, a study says. Passenger vehicles' volumes are likely to be hit by the chip shortages, though volumes should be slightly better MoM. Two-wheelers and tractors are likely to decline due to the moderation in rural demand and high base effect on account of pent-up demand last year. The festive season has been subdued for passenger vehicles, 2-wheelers and tractors. Emkay global retains a positive view on the auto sector, underpinned by expectations of a cyclical upturn in the next three years. The brokerage house is positive on Tata Motors (TP: Rs 550), Ashok Leyland (TP: Rs 160), Maruti Suzuki (TP: Rs 8,750) and Hero MotoCorp (TP: Rs 3,700). In ancillaries, they like Motherson Sumi (TP: Rs 300), Bharat Forge (TP: Rs 950) and Ramakrishna Forgings (TP: Rs 1,530). CV industry volumes are expected to improve, aided by demand for Intelligent and Connected Vehicles (ICVs) and tippers. Emkay Global expects domestic volume growth of 23 per cent YoY for Eicher Motors, 11 per cent for Tata Motors and 2 per cent for Ashok Leyland. In comparison, M&M is likely to see a 19 per cent dip as chip shortages affect dispatches.

Two-wheeler industry's volumes are likely to be lower than last year due to the moderation in rural demand and high base effect on account of pent-up demand last year. In addition, the chip shortage has affected dispatches of premium motorcycles, especially for Eicher Motor-Royal Enfield. It expects domestic volumes to decline by 24 per cent YoY for Eicher Motor-Royal Enfield, 20 per cent for Hero Moto Corp, 15 per cent for TVS Motors and 10 per cent for Bajaj Auto.

When it comes to PV (Passenger vehicle) industry, volumes should fall due to supply-related challenges, though volumes should be slightly better on a sequential basis. Emkay estimates domestic volumes to grow by 39 per cent YoY for Tata Motors and 2 per cent for M&M, while it expects a decline of 15 per cent for Maruti Suzuki. Production is expected to further improve ahead on better chip supplies. Discounts remain low considering robust order-book. Tractor volumes are likely to see a decline due to the high base from last year. The study expects domestic volumes to decline by 11 per cent for M&M and 17 per cent for Escorts.