Auto OEMs’ numbers sprung a positive surprise with a sharp rise in volumes in June 2021. Monthly sales were helped by robust pent-up demand post ease in restrictions and lower base effect.
Strong Rebound in PV Volumes
Trends in the domestic passenger vehicle segment were strong, with 2x volume growth during the month. PV industry saw healthy demand YoY in June 2021, helped by (1) reopening of the economy in various states, (2) pent-up demand as dealerships opened after 1-2 months, and (3) low base effect of last year.
Maruti Suzuki’s total volumes increased by 157% YoY in June 2021 and 9% on a pre-COVID basis. M&M’s volumes grew at 65% YoY during the month. But declined by 7% on a 2-year CAGR basis. Tata Motors' PV volumes posted a 66% YoY growth and grew at 34% on a 2-year CAGR basis.
Overall demand for PVs is expected to remain strong as dealers are reporting healthy inquiry and booking levels. Lower inventory levels in the system are expected to boost order books of OEMs. And it would be further supported by the growing preference for personal mobility.
2Ws: Volumes Remain Below Pre-COVID Levels
Among two-wheelers, the export segment continues to maintain its momentum despite the container shortage. Domestic demand also rebounded during the month, albeit on a lower base, after being subdued over a couple of quarters.
Bajaj Auto and TVS Motor's total volumes increased by 22-25% on a YoY basis. However, it remained 6-8% below on a 2-year CAGR basis. Volumes for Hero Moto grew by 4% while declined by 13% on a CAGR basis, reflecting the subdued domestic sentiments. Royal Enfield registered 13% YoY growth but declined 14% on a CAGR basis.
CVs Surge Up on Economic Recovery
Commercial vehicle volumes are improving on YoY as well as MoM basis. Continued sequential recovery is a positive sign and indicates reopening of the economy, pick-up in factory output, and infrastructure projects.
Tata Motors' total CV volumes increased by 146% YoY but remained 24% down on a CAGR basis. Ashok Leyland's total CV volumes increased by 174% YoY but 29% down on a CAGR basis. M&HCV and LCV divisions continue to drive volume growth while demand for buses is yet not visible.
Tractors Continue to Outperform
Tractors have continued to outshine the rest of the vehicle categories, as they grew 28% YoY even on a higher basis. The volumes remained comfortably above the pre-COVID levels and grew at 20% on a 2-year CAGR basis.
M&M's tractor volumes posted a 21% CAGR growth over June 2019, while Escorts posted 15.5% CAGR growth on tractor volumes.
The timely arrival of monsoons and government support in the form of higher MSP prices are the major boosters for tractors in the rest of the season.