Automobile volumes in May 2021 are likely to be hit by the second COVID-19 wave and lockdowns across states. In comparison to May 2019, May 2021 volumes are expected to witness a double-digit decline across segments, according to Emkay Global Financial Services.
As volumes are not comparable y-o-y due to the low base last year, Emkay has weighed them against May 2019 numbers. Tractors/PVs should see a lower decline in comparison with 2Ws/ CVs. Emkay Global Financial Services expects a swift recovery in volumes from Q2FY22 due to easing of lockdowns and pent-up demand.
Agricultural field activities have not witnessed any obstruction/ problems due to the second wave. However, despite being considered as an essential category, tractor volumes should be subdued on account of the severe impact of the pandemic in rural areas. Two-year CAGR for domestic volume is likely to be -21 percent for ESC and (-) 23 percent for MM.
PV industry volumes are expected to be in the slow lane, despite healthy order-book across most OEMs. Two-year CAGR for domestic volume is estimated to be (-)4 percent for TTMT, -31% for MM and -49% for MSIL.
2W industry volumes should be weak. Two-year CAGR for domestic volume is expected to be -43% for EIM-RE, -51% for BJAUT, -54% for TVSL and -58% for HMCL.
CV industry volumes should be under pressure due to lower freight availability, resulting in the postponement of purchase orders by transporters. Two-year CAGR for domestic volumes is likely to be (-) 55 percent for MM, -59 percent for AL, (-) 60 percent for EIM-VECV and (-) 61 percent for TTMT.
Emkay Global Financial Services positive view on the automobile sector is underpinned by expectations of a strong cyclical upturn, which is expected to last at least three years.
