Sales recovery to continue in August but supply-side issues persist, Auto News, ET Auto

NEW DELHI: Industrial autos (CVs) and two-wheelers volumes are prone to report robust gross sales in August, whereas tractor volumes might even see some seasonal softness, say market consultants. Demand for private autos (PVs) may stay robust, however supply-side challenges, say the consultants monitoring the sector.

Sellers are witnessing a robust rise in enquiries and order reserving throughout segments, say analysts, anticipating robust gross sales within the festive season. However the scarcity of semiconductor chips is hurting the sector. These chips are utilized in virtually all autos for easy functioning of powertrains, superior driver help methods and infotainment consoles. They add to the security and comfort of passengers.

The chip provides in India are largely dealt with by distributors equivalent to Arrow Electronics and Millennium Semiconductors. For mass-market PVs, the chip content material stands at $40-50 per automobile — increased than that of two-wheelers and CVs. That’s the reason analysts anticipate increased provide points with PVs, particularly within the premium classes.

Tata’s Jaguar and Land Rover (JLR) has already mentioned the chips’ scarcity would severely influence its manufacturing within the September quarter. Even Maruti Suzuki is anticipated to chop down its August manufacturing by 30-40 per cent due to this difficulty, Sharekhan says.

The brokerage says it expects industrial autos gross sales to recuperate strongly, adopted by tractors, two-wheelers and passenger autos, in that order. The scarcity of chips is a serious concern and is affecting PV manufacturing in India and the world over, it provides.

Within the private automobile phase, Motilal Oswal Securities expects volumes for Maruti Suzuki to develop 2 per cent YoY, Tata Motors 35 per cent and Mahindra & Mahindra 30 per cent. Within the industrial automobile phase, the brokerage sees Ashok Leyland’s wholesale enterprise to develop 72 per cent YoY and that of Tata Motors’ 57 per cent. Tractor maker M&M is seen reporting a 5 per cent quantity development and Escorts 14 per cent.

Analysts say the wholesale enterprise of Bajaj Auto’s two-wheelers will develop at 2.5 per cent and TVS Motor at 6.4 per cent. Hero MotoCorp might even see a ten per cent YoY fall in volumes. The semiconductor scarcity is impacting the above-150cc phase’s volumes.

Emkay World says: “Tractors might even see a blended quantity efficiency within the home market, with a 5 per cent YoY decline doubtless for Escorts and 4 per cent YoY development for M&M. Escorts is prone to see a quantity decline as a result of excessive base, a steep enhance in automobile costs, and a few influence on buyer sentiment as a consequence of monsoon deficiency, in our view.”

The NSE Auto has underperformed Nifty by 12.5 share factors in 2021, with a broad-based underperformance throughout shares. It’s up 6 per cent in opposition to Nifty’s 18.6 per cent returns.