- 20 Mar 2023
- ICICIdirect Research
Demand, enquiries reportedly tapering in PV space
News: As per media sources, fresh booking and enquiries level have dropped in the recent past in the passenger vehicle segment signalling tapering of demand momentum. The inventory at the dealer level has built up and is now pegged at ~3 lakh units as of FY23E end, highest since September 2019 vs. the lowest witnessed at ~ 1 lakh units as of December 2022. The rate of cancellation has also increased from ~10% in the past to 15-20% now.
Views: Softening of demand is in response to cars becoming more expensive amid rise in RM prices as well as regulatory led changes. Rise in interest rates domestically is also one of the reason for deferment of demand. As per industry sources, we are likely to end FY23 with domestic PV sales of ~38 lakh units, up 26% YoY with growth expected to taper to 5-7% in FY24E. For our coverage we see this impacting wholesale numbers at Tata Motors in the near term with impact likely to be visible with couple of months lag at Maruti with M&M seen as largely insulated given their healthy pending orderbook (combined in excess of 5 lakh units).