New Delhi [India], December 29 : The Indian automobile sector is poised for strong growth, with December sales volumes expected to rise across all vehicle categories. The Nuvama Institutional Equities report noted that double-digit growth is likely in the domestic markets for two-wheelers, passenger cars, and commercial vehicles.
According to the report, several factors are making it easier for people to buy vehicles. The report noted that sales are being driven by "continued positive customer sentiments spurred by better affordability (Courtesy of GST cuts), new products, interest rate cuts and adequate finance availability".
While some pressure exists on rural buyers due to declining crop retail prices, the overall mood remains positive.
In the two-wheeler (2W) segment, industry volumes are predicted to grow by about 22 per cent in the domestic market compared to last year. TVS Motor (TVSL) is expected to lead this group, with 29 per cent growth to 415,000 units.
Eicher's Royal Enfield (EIM-RE) and Hero MotoCorp (HMCL) are also likely to see significant gains of 26 per cent and 23 per cent, respectively. This "robust growth is despite some pressure on rural sentiments due to a drop in retail crop prices."
The passenger vehicle (PV) market, which includes family cars and SUVs, is also projected to see a 21 per cent rise in domestic sales. Mahindra & Mahindra (MM) and Maruti Suzuki (MSIL) are expected to outperform competitors in this category.
Specifically, Mahindra's auto division is forecast to grow by 29 per cent to 90,000 units, Maruti Suzuki by 23 per cent to 220,000 units, and Hyundai by 9 per cent to 60,000 units. To attract more buyers, companies have slightly increased the discounts they offer. For some brands, "discounts are higher even on a YoY basis, especially due to higher discounts for EVs."
Commercial vehicles, such as trucks used for business, are anticipated to grow by 17 per cent. This is helped by "improved freight availability (due to higher consumption demand)" and a shift where people choose new vehicles over used ones.
Meanwhile, tractor sales are expected to grow by about 14 per cent, "owing to better affordability in the wake of GST rate cuts and Maharashtra state subsidy scheme."
Beyond India, the report expects exports to rise in double digits as well. Growth is primarily driven by higher demand in regions such as Asia, Africa, and Latin America. "Our analysis shows TVSL and EIM-RE would lead peers in 2Ws, while MM and MSIL shall outperform among PVs. In all, we maintain our constructive view on the automobile sector," the report said.
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