CV sales growth momentum may continue in November

“Our dealer checks indicate that overall retail demand-pull in November been slower than our expectations at the start of the month,” analysts at Nomura Research said in their note.

Demand for passenger vehicles remains strong while that for commercial vehicles (CV) is improving. Nevertheless, chip shortages continue to play spoilsport, impacting production and sales volumes for PV. Some gradual recovery is, however, expected with the easing of chip shortages. 

The demand for two-wheelers remains weak while production and sales of high-end two-wheelers have been impacted due to chip shortages. Tractor demand is stable, though the high base of last year may pose challenges.

In November, wholesale volumes are estimated to decline 17% and 8% year-on-year for two-wheelers and tractors respectively, say analysts at Motilal Oswal Financial Services Ltd. PV volumes are estimated to grow by 6% year-on-year with the easing of semiconductor availability. 

CV wholesales are estimated to rise by 25% YoY. Light commercial vehicles and medium and heavy CVs are expected to grow by 10% and 49% respectively. Three-wheeler demand is expected to be jump 28% on a low base of last year.

Two-wheeler demand remains a cause of worry. In this segment, channel checks indicate that industry retails have declined year-on-year and inventory levels remain elevated at 6-7 weeks, said analysts at Nomura Research. Besides high vehicle prices, they believe that rising preference for electric models could also be a factor affecting demand, as customers wait for several new electric models due to be launched after capacity ramp in FY23.