The first month of the calendar year 2023 witnessed a great start for the automobile industry as almost every segment posted higher sales than the corresponding period of 2022. The passenger vehicles segment saw an uptick of 21% year-on-year and 30% month-on-month. Below is the segment-wise breakup of auto sales. It is a clear reflection of the strong momentum in the automobile industry.
| Category | Jan-23 | Jan-22 | % Y-o-Y | Dec-22 | % M-o-M |
| Passenger Vehicles | 3,31,885 | 2,75,067 | 20.70% | 2,55,895 | 29.70% |
| Commercial Vehicles | 76,596 | 70,160 | 9.20% | 77,035 | -0.60% |
| 3-Wheeler | 49,809 | 29,677 | 67.80% | 42,428 | 17.40% |
| 2-Wheelers excl. HMSI* | 8,40,247 | 7,72,300 | 8.80% | 7,68,985 | 9.30% |
| Total | 12,98,537 | 11,47,204 | 13.20% | 11,44,343 | 13.50% |
Source: Axis Securities, Company reports, Fisdom research. *HMSI – Honda Motorcycle and Scooters Limited
Segment wise performance:
- The passenger vehicle segment saw a robust month-on-month uptick of close to 30% amid a low base due to inventory correction. In terms of wholesale numbers, companies witnessed substantial growth. Maruti Suzuki India, which contributes to almost ~44 % of total passenger vehicle sales, grew by 46.6% on a month-on-month basis. M&M posted the highest growth of 65% on a year-on-year basis among peers. The increase in M&M numbers was on the back of the fresh product Scorpio N launch.
- Electric vehicle sales also witnessed healthy volumes amid a small base. Tata Motors is a crucial player in the EV segment and reflects the overall industry trend in the electric vehicle space. The company reported 4133 units sold on Jan 23, up by 39% y-o-y.
- The commercial vehicle or CV segment continued its strong growth trajectory. The continued uptick in demand due to the fleet replacement, growth in freight availability and the government’s consistent push for infrastructure projects have helped the CV segment rise above pre-covid numbers.With all significant companies witnessing growth on a y-o-y basis. However, on a month-on-month basis, companies such as TATA Motors and Ashok Leyland faced challenges on the export front as many global counterparts were going through macroeconomic challenges.
- Within the two-wheeler segments, low-end motorcycle manufacturers like Hero MotoCorp and TVS Motors posted a decline due to slow recovery and moderation in demand. Bajaj Auto and Eicher Motors’ critical players in high-end bike manufacturers posted decent growth. It indicates that customers preferred higher-end motorcycles instead of entry-level or low-end motorcycles.
Here are some of the factors playing out in favour of automobile industry:
Budget FY24:
The Budget has laid the foundation for even strong growth for the automobile industry. Demand for entry-level vehicles in all segments will benefit from a significant relief on income tax rebates under the new tax regime. Allocation towards vehicle scrappage policies and exemption of import duty for manufacturing lithium batteries will lead to reduced costs for manufacturing electric vehicles.
The government’s emphasis on replacing old government vehicles will powerfully boost the automobile industry. The budget has made key announcements further boosting infrastructure projects. A 33% growth in Capex with an allocation of Rs. 10 lakh crores will directly impact the mobility and logistics sector, increasing sales of commercial vehicles, which are already witnessing a substantial uptick.
China Re-opens:
With China’s factory activity gaining traction and the supply of semiconductors and other parts returning, the standard waiting time for vehicles may decline. China opening is a big positive for the passenger vehicle segment in India.
Price hike and decline in commodity prices:
While auto companies have tried to pass on most of their inflated raw material costs to end consumers by undertaking price hikes, declining raw material prices will further help improve operating margins, thereby increasing profitability. Below are the prices of raw materials:
| Commodity | Units | 31-03-2022 | 13-01-2023 | % Change |
| LME Index | Index | 5174 | 4273 | -17.40% |
| Zinc | $/ton | 4260 | 3302 | -22.50% |
| Lead | $/ton | 2433 | 2215 | -9.00% |
| Nickel | $/ton | 33400 | 27175 | -18.60% |
| Aluminium | $/ton | 3503 | 2511 | -28.30% |
| Copper | $/ton | 10337 | 9107 | -11.90% |
| Tin | $/ton | 44200 | 28530 | -35.50% |
| Brent Crude Spot | $/ton | 107 | 84 | -21.50% |
| China HR steel Average Price | CNY/ton | 5267 | 4198 | -20.30% |
Source: Business Standard, Fisdom research
An Indian consumer is price sensitive hence any reduction in raw material prices of auto companies will impact future price hikes.
OEM wise Market Share Data for top “five passenger vehicles” companies for January’23 with YoY comparison
| PV OEM | Market Share (%), Jan’23 | Market Share (%), Jan’22 |
| Maruti Suzuki India Ltd | 44.10% | 46.00% |
| Hyundai Motor India Ltd | 13.40% | 13.60% |
| Tata Motors Ltd | 13.20% | 12.30% |
| Mahindra & Mahindra Limited | 9.90% | 7.10% |
| Kia Motors India Pvt Ltd | 5.60% | 3.50% |
Source: Business Standard, Fisdom research
OEM wise Market Share Data for “top five two-wheeler” for January’23 with YoY comparison
| 2-Wheeler OEM | Market Share (%), Jan’23 | Market Share (%), Jan’22 |
| Hero Motocorp Ltd | 29.30% | 30.90% |
| Honda Motorcycle and Scooter India (P) Ltd | 25.10% | 22.40% |
| TVS Motor Company Ltd | 16.40% | 15.70% |
| Bajaj Auto Ltd | 10.90% | 12.20% |
| Royal-Enfield (Unit of Eicher Ltd) | 5.00% | 4.10% |
Source: Business Standard, Fisdom research
OEM wise Market Share Data for “top five commercial vehicle” for January’23 with YoY comparison
| Commercial Vehicle OEM | Market Share (%), Jan’23 | Market Share (%), Jan’22 |
| Tata Motors Ltd | 38.60% | 44.10% |
| Mahindra & Mahindra Limited | 25.00% | 20.20% |
| Ashok Leyland Ltd | 16.20% | 14.70% |
| VE Commercial Vehicles Ltd | 6.70% | 6.30% |
| Maruti Suzuki India Ltd | 4.60% | 5.30% |
Source: Business Standard, Fisdom research
Disclaimer:1- The above numbers do not have figures from TS & LD. | 2- Vehicle Retail Data has been collated as on 04.02.23 in collaboration with Ministry of Road Transport & Highways, Government of India and has been gathered from 1,341 out of 1,428 RTOs.
Way ahead:
The government also highlighted the expectation of improvement in rural wages as inflation started calming down further in FY24. It will translate into an increase in rural wages, and hence we are very hopeful that the same will positively impact the rise in 2-Wheeler sales.
Ample financing, better rabi sowing, decline in raw material price, PLI incentives, improving infrastructure and governments emphasis on enhancing mobility well be key factors to be looked upon for the automobile industry.
Nonetheless, long-term fundamentals continue to remain intact for automobile sector.
Markets this week.
| 06th February 2023 (Open) | 10th February 2023 (Close) | %Change | |
| Nifty 50 | 17,819 | 17,857 | 0.21% |
| Sensex | 60,847 | 60,842 | -0.27% |
Source: BSE and NSE
- Markets witnessed volatility and ended on a flat note.
- Key triggers for the market during the week were rate hike by RBI, continued selling by foreign institutional investors and mixed set of corporate results.
- The Reserve Bank of India hiked its key policy rate by 25 basis points. The repo rate stands at 6.5 percent. From May 2022 till date RBI has hiked rate by 250 basis points.
- Meanwhile on Friday India’s Industrial growth declined by 4.3 percent in Dec’22. The latest IIP figures are way below the previous month’s growth rate of 7.3 percent. Manufacturing sector output grew by 2.6 percent in Dec’22.
- Foreign institutional investors have sold equities worth Rs. 5,414 crore during the week, whereas DIIs bought equities worth 6,453 crore.
Weekly Leaderboard:
| NSE Top Gainers | NSE Top Losers | ||
| Stock | Change (%) | Stock | Change (%) |
| Adani Ports & SEZ | ▲ +17.06% | TATA Steel | ▼ -9.60% |
| Adani Enterprises | ▲ +16.39 % | Hindalco Industries | ▼ -5.77% |
| Bajaj Finance | ▲ +7.00 % | Coal India | ▼ -3.38% |
| HDFC Life Insurance | ▲ +6.88 % | Eicher Motors | ▼ -3.15% |
| Indusind Bank | ▲ +5.22 % | Hindustan Unilever | ▼ -2.69% |
Source: BSE
Stocks that made the news this week:
?M&M reported another robust quarter led by the robust performance of auto division. Farm division also reported healthy growth with increased market share. Mahindra & Mahindra’s operating margins improved 130 basis points at 13% in the said quarter. The company sold 1.76 lakh vehicles in the December quarter, 45% higher than the previous year period. Meanwhile, tractor sales, which account for a bulk of M&M’s volumes jumped 14% YoY for the period under review.
?NSE has removed Adani Ports and Ambuja Cements out of short term Additional Surveillance Measure Framework (ASM). NSE had put these stocks under radar amid massive sell off in the wake of Hindenburg research report raising concerns over debt positioning of Adani group companies. However, Adani Enterprises continues to remain under the ASM framework.
?MSCI has added two stocks and removed on stock one stock as part of its February rebalancing. CG power, RIL, Bank of Baroda, HUL, Axis Bank, HDFC Ltd, ICICI Bank, TCS, and Bharti Airtel are the top 10 stocks which saw increase in weights. Four Adani group companies saw reduction in weightages.
