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December Auto Sales Preview: Passenger vehicles, tractors may skid on-month; 2-wheelers, CVs likely to accelerate – check analysis

December Auto Sales India: The automobile sector is expected to continue its winning trajectory in December 2022 sales figures as several analysts expect growth to persist across segments year-on-year (YoY). However, they are skeptical on a month-on-month basis, estimating a fall in the cars and tractors segment.

“In December 2022, PV (passenger vehicle) volumes are likely to be higher YoY, though volumes would be lower MoM due to production constraints. Further, tractor volumes are likely to be better on a YoY basis but decline MoM due to seasonality,” Raghunandhan NL of Emkay research said.

In addition, the two-wheeler (2W) volume growth should be positive YoY, supported by wedding season demand and favourable base effect. While commercial vehicles (CVs) are likely to maintain their double-digit growth momentum, the analyst said, being constructive on the auto sector.

Varun Baxi, Research Analyst at Nirmal Bang, a brokerage firm, said that the retails are expected to remain strong for PVs, driven by the high order backlog, but the yearend discounts are back for some slow-moving models to clear up the inventory.

“We note that the waiting periods are declining with supply chain issues getting resolved to a large extent and our interactions indicate 8-10 per cent YoY growth in retails for PVs,” the analyst noted.

Two-wheeler demand continues to be affected by a delayed recovery in the rural markets. It is expected to decline by mid-single digit, Baxi said, while the demand remains robust in CVs for both cargo and passenger vehicles, he added, stating that tractor sales may register strong mid-single digit growth in December.

Gautam Duggad of Motilal Oswal prefers four-wheelers over two-wheelers amid a strong order book, traction for new model launches and a stable competitive environment.

The analyst expects the CV cycle to maintain its momentum led by a healthy fleet utilization level of 78-80 per cent, strong demand in underlying industries, and better supply chain situation.

For most brokerages, Maurti Suzuki was among the preferred pick in the PV segment, owing to a strong new model pipeline and market share gains led by new models and plugging of product gaps. While brokerages are also bullish on auto stocks like Tata Motors, Ashok Leyland, and TVS Motor.

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