Healthy volume prints in May 2023; 2-W space outshines!

What's Buzzing 

Overall wholesale volume prints for May 2023 came in steady with a sequential recovery witnessed almost across all segments. Rural demand recovery green-shoots were visible with the motorcycle segment growing ahead of the scooter segment. Export also staged a comeback and was up on an MoM basis for most OEMs. 

Context 

Key outperformer on the segmental front this time around was the 2-W space with healthy volume prints. In the PV space, chip supply issues continue to weigh on production ramp up at key OEMs. The CV space witnessed a sequential recovery amid guidance for a muted Q1FY24. Key outperformers within key segments were Hero MotoCorp in the 2-W space, Maruti Suzuki in the PV space, Tata Motors in the CV domain and Escorts in the tractor segment. 

Our Perspective 

In the 2-W space, Hero MotoCorp outperformed its peers with 31.1% MoM growth at 5.2 lakh units (third such reading of 5 lakh+ volume during the last year). Also positive was volumes at Eicher Motors (Royal Enfield) growing 5.9% MoM at 77,461 units (highest reading in the last seven months). In the PV space, volumes at Maruti Suzuki outshone the rest of the pack with 10.7% MoM growth at 1.75 lakh units with key positive being its UV volumes at ~46,000+ units (highest ever, tracking new model launches like Grand Vitara, Fronx) whereas rest of the peers reported muted show tracking chip concerns. In the CV segment, Tata Motors posted 28.9% MoM growth at 28,989 units, Ashok Leyland posted 1.2% MoM growth to 13,134 units. Buses segment continues to witness healthy demand traction and was well on the road to recovery. In the tractor space, Escorts surprised positively and grew 8.9% MoM at 9,167 units, M&M's tractor sales were down 4.5% YoY at 34,126 units. For FY24E, we expect industry volume growth to taper amid the high base of FY23. However, we continue to remain positive on PV (underpenetrated category domestically) and CV domain (beneficiary of robust government spending on infrastructure).