December 2022 auto sales: Firms see mixed trends; new launches, easing of chip shortage to propel PVs & 2-wheelers sale, analysts say
Ashwin Patil of LKP Securities believes December 2022 auto sales were sequentially low due to the high base of November and it being a seasonally weak month.
December 2022 auto sales: The auto companies posted a mixed set of trends across segments in December 2022, wherein the Commercial Vehicle (CV) and tractor categories outperformed with a steady growth, while Passenger Vehicle (PV) and Two-Wheeler (2W) segment reported muted performance, as per analysts.
Aditya Welekar, Senior Research Analyst at Axis Securities, said that the domestic CV wholesales registered positive sales momentum on both year-on-year and month-on-month (YoY/MoM) in the last month, driven by the pick-up in infra spending and replacement demand of fleet operators.
The demand in tractor segment continues to surprise positively with 28 per cent YoY growth, led by positive agri-sentiments, he said in the December auto sales review report.
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Image Source: Axis Securities
Conversely, the domestic PV wholesale volumes grew by 8 per cent YoY, but fell 15 per cent MoM on maintenance shutdown by most Original Equipment Manufacturers (OEMs), non-availability of semi-conductors for some models, and lower demand for entry-level segment vehicles, the analyst noted.
He added that the domestic sales of two-wheeler grew by 3 per cent YoY, and posted a de-growth of 7 per cent MoM amid continuing weakness in export demand and muted rural disposal incomes.
Similarly, Ashwin Patil of LKP Securities believes December was sequentially low due to the high base of November and it being a seasonally weak month.
However, the fourth and the last quarter of the year is expected to witness stronger growth in the PV segment as the chip shortage issue eases further and with new launches lined up in both ICE (Internal Combustion Engines) and EV (Electric Vehicle) segment, the analyst at LKP Securities stated.
Image Source: Axis Securities
The two-wheelers shall further gain strength on the low base of last year, EV launches, and good monsoon, leading to better rural demand on the back of solid Rabi crop, Patil said while reviewing the auto sales in December 2022.
He added that the CVs are already continuing with their good run, while tractors shall report a decent growth this year on good monsoon, Rabi sowing, and improvement in the rural economy.
December 2022 wholesale volume performance was a mixed bag, Vivek Kumar of JM Financial said, and added that barring CVs, wholesales declined on a MoM basis across segments due to lower inventory push of outgoing models and seasonality.
The CV segment volumes received a boost from healthy growth in the medium and heavy commercial vehicle (M&HCV) segment. The healthy order book is expected to support PV segment growth in the near term, Arun Agarwal VP – Fundamental Research, Kotak Securities said in his note.
According to Agarwal, the turnaround witnessed in tractor demand over the past few months continued in December 2022, while two-wheeler performance was muted mainly due to weak demand in the domestic markets and continued challenges in export geographies.