Automobile Sales Update for February 2022

Auto sales for February 2022 were a mixed bag, as easing supply chain constraints and positive macroeconomic cues helped PVs and CVs but muted demand continued to hamper 2-wheeler and Tractor sales. The 3-wheeler space continued to decline.

Let’s find out which company fared well in its segment:

Passenger Vehicle Sales:

The sales numbers were boosted by the ease in Covid-19 restrictions and growing demand for electric vehicles, while semiconductor shortages and high fuel costs remained key concerns for automakers.

Maruti Suzuki: Sales volume in Feb '22 was supported by strong demand momentum. The company said the shortage of electronic components had a minor impact on the production of vehicles sold in the domestic market. Total volume for market leader Maruti Suzuki came in at 1.64 lakh units, up 6.3% MoM. Mini & Compact segment witnessed 8.2% MoM growth to 97,486 units while UV segment reported a decline of 4.7% MoM to 25,360 units. 

Export volumes increased 33.9% MoM to 24,021 units and was highlighted for the month. Maruti Suzuki has launched the new Baleno and WagonR and has a spate of upcoming launches such as the new gen Brezza, Alto, Baleno CNG, Brezza CNG, Swift CNG, Dzire CNG – which could help increase sales over the next couple of months.

Hyundai: Hyundai continued its second position on the list. Sales dipped 14.6% YoY to 44,050 units, down from 51,600 units sold in February 2021. Reduced sales last month saw market share of the company dip from 16.7% held in Feb 2021 to 14.5% in the past month. Sales remained flat on a MoM basis over 44.022 units sold in January 2022. Upcoming Hyundai launches include Creta facelift, Venue facelift, new gen Tucson.

Mahindra: Mahindra’s sales in the past month were outstanding. The company reported an increase both in domestic sales and exports with February 2022 sales their highest ever. Sales in the past month stood at 27,563 units, up 79.2% YoY over 15,380 units sold in February 2021. MoM sales increased 38.8% from 19,860 units sold in January 2022. This led to a significant increase in market share to 9.1% last month over 5% held in February 2021. Mahindra found the most demand for recently launched Thar and XUV700.

Tata Motors: PV sales declined on an MoM basis. However, it was up YoY. PV sales stood at 39,981 units, up 47% over 27,225 units sold in February 2021. The company gears up to introduce the Nexon EV facelift. Tata also has plans to launch electric versions of Altroz and Punch in the future. This year they will also focus on launching Altroz automatic as well as CNG versions of Punch, Nexon, and Altroz.

Commercial Vehicle Sales:

Recent announcements in the Union budget 2022-23 i.e. robust allocation of Rs 7.5 lakh crore (up 35% YoY) as capital expenditure for FY23E & extension of commissioning date by a year to avail concessional tax rate (~15%) for new manufacturing set-ups is expected to further spur commercial vehicle sales, going forward. CV demand recovery continues to ride on the push for infra activities and improving freight rates. The CV cycle is expected to maintain momentum.

Tata Motors: CV demand recovery continued on a MoM basis, the volumes were higher by 6.5% compared to January. It reported sales of 10,233 units of M&HCV, 5,599 units of I&LCV, 1,759 units of passenger carriers and 16,303 units of SCV cargo and pickups.

Ashok Leyland: Overall, Medium and heavy commercial vehicle volume posted growth on a YoY basis on the back of demand from infrastructure & construction sectors. MHCV sales grew by 16%. Sales of light commercial vehicles in the domestic market were down 12%.

2 Wheeler Sales:

The sales number in this segment was below estimate as the volume declined 20% YoY. 2W demand recovery is still back-ended and so shows no signs of an uptick. Dealer inventory continues to remain around 60-75 days as per channel checks. Volumes declined for most 2W players like TVS, Royal Enfield, and Hero Motocorp. The two-wheeler industry posted an 8% sequential decline in domestic wholesale volume in Feb.

Hero MotoCorp: The motorcycle segment witnessed a decline of 5.4% on a MoM basis, while the scooter segment reported a decline of 12.5% on MoM basis. The company remains optimistic about demand in the coming months, led by the upcoming marriage season and positive rural sentiments. Overall it sold 3.58 lakh units of motorcycles and scooters in Feb '22.

TVS Motors: The shortage in supply of semiconductors has impacted the production and sales of premium two-wheelers. The company is cautiously optimistic that the supply of semiconductors will improve in the coming months. TVS Motors’ 2-W sales were up by 5.3% MoM to 2.67 lakh units with an increase in the scooter segment at ~7.5% MoM.

Tractor sales:

The volume is below estimates as overall sales declined 33% YoY. Tractor volumes declined due to weak rural demand. OEMs are hopeful of bouncing back since agri indicators are in place. M&M and Escorts Tractor volumes declined 27% and 46% YoY, respectively. Agri-indicators continue to be promising with the Rabi season sowing at an all-time high and higher liquidity with farmers on account of timely and record procurement of Kharif crops.

Escorts: The tractor industry wholesales continued to remain subdued in February 2022, subdued in Feb'22 due to the high base of last year, steep price increase due to higher inflation in commodity prices impacting retails and above normal inventory levels with the channel. Given the Government's thrust on infrastructure projects in the coming year(s) and stabilisation of increased pricing in the market, the compact expects demand to start improving for construction equipment in the coming year.

3 Wheeler sales: 

The 3-W industry sales volume witnessed some green shoots with market leader Bajaj Auto posting domestic 3-W sales volume growth of 15% MoM within the overall volume decline of 8.3% MoM (tracking decline in exports).

February Auto Sales Review:

• Overall Auto Sales in Feb were a mixed bag with PVs and CVs showing some signs of improvement while other segments declining MoM.
• Passenger Vehicles showed signs of improvement due to increased demand and easing supply chain constraints. Major players like Maruti, Mahindra and Tatas have showed a MoM increase in their sales.
• Commercial Vehicle segment continued to rise on the back of positive macroeconomic cues. Factors like concessional tax rates and increased push for Infra related activities in recent Union Budget will help CVs continue its momentum.
• 2-wheeler segment have not shown any signs of improvement with major players like Hero MotoCorp, Honda and Bajaj declining more than 30% YoY. However, positive rural demand and easy availability of components will help this segment grow in the future. 
• Tractor sales in Feb declined due to muted rural demand. However, higher rabi sowing this year, increase allocations to rural and agri sector in the recent Union budget and signs of normal monsoon will drive growth in the tractor industry this year.
• Prices of commodities and crude oil are expected to rise due to the ongoing  Russia-Ukraine crisis which may hamper the growth in the Auto sector further.