Auto Volumes February 2025 - Rural led - tractor space continues to outperform

OEM wholesale sales volume for February 2025 came in steady with tractor segment outperforming its peers. 2-W space witnessed mixed trends amid muted domestic show while exports lifted the overall volume prints. CV space witnessed another month of muted show while marginal growth was visible in the PV space.

M&M outperformed in PV segment while Eicher Motors lead the charge in 2W domain. M&M continue to dominate the tractor segment while VECV arm at Eicher Motors outperformed in the CV space.

In 2-W pack, Eicher motors (Royal Enfield franchise) outperformed its peers with healthy growth of 19% at 90.7K units. While TVS Motors reported steady growth of 9.5% YoY at 3.9 lakh units (led by 28% YoY growth in exports amid tepid 3% YoY growth domestically), Bajaj Auto witnessed a tepid volume growth of 1.6% YoY at 3 lakh units (exports up 24% YoY while domestic down 14% YoY).

In PV space, M&M continued with its healthy performance, growing 19% YoY at 50.4k units. Maruti Suzuki reported steady prints for the month (up 1.2% YoY). Product mix marginally improved at Maruti with UV share in total sales volume pegged at ~33% vs. ~31% in January’25. Tata Motors EV volumes were muted at 5,343 units (down 23% YoY, however up marginally 2% MoM).

In CV segment, Tata motors reported muted CV volumes of ~32.5k units, down 7.3% YoY. Ashok Leyland volumes were up marginally by 1.5% YoY at ~17.9k units. While volumes at VECV arm of Eicher Motors grew 9% YoY at 8.1k units. Buses as well as LCV’s witnessed pressure on volumes amidst already tepid show by the heavy-duty truck segment.

In tractor space, M&M reported volumes of 25.5k units, up by 18% YoY while Escorts Kubota reported a growth of 11% YoY at 8.6k units. Overall, the tractor segment is anticipated to grow at high single digit in FY25E with volume growth for Q4FY25 expected at 15% YoY.

We are positive on PV space as we believe this space will benefit from personal income tax rationalisation in FY26E and 8^th pay commission roll out for central government employees in FY27E. Our top bets in this space are M&M (Target Price: ₹ 3,850)