Auto Sales: Positive momentum from June should continue in July

  • Ease in lockdowns and pent-up demand across regions to aid sales.
  • Expect a sequential improvement in volumes across segments, barring Tractors

Mumbai, July 30: As per a research report released by Emkay Global Financial Services, the auto sales for the month of July 2021 is likely to be strong. The channel-check exercise undertaken by the research firm indicates a positive momentum as witnessed in June 2021. The strong sales will be aided by the easing of lockdowns and pent-up demand across regions.

Emkay Global Financial Services expects a sequential improvement in volumes across segments, barring Tractors due to seasonal factors. It has retained a positive view on the Auto sector with Tata Motors (TP: Rs400), Ashok Leyland (TP: Rs155), Maruti Suzuki (TP: Rs9,000) and Eicher Motors (TP: Rs3,180) as their top picks. In Ancillaries, their preference is like Motherson Sumi (TP: Rs325) and Apollo Tyres (TP: Rs290).


Industry wholesales should be supported by a favourable base as dispatches were affected last year due to supply issues. Customer sentiments have been aided by near-normal monsoons and adequate reservoir levels. Emkay Global expects domestic volume to grow by 51% YoY for Escorts and 27% YoY for M&M. Escorts’ growth is likely to be higher due to a relatively lower base.

Passenger Vehicles

Industry volumes should improve on the back of a healthy order book and a pickup in enquiries/bookings in urban and rural areas. In addition, wage revisions for government employees have also likely aided demand. Comparing domestic PV volume with Jun’19 numbers, Emkay Global estimates a 2-year CAGR of 57% for Tata Motors, 18% for Maruti Suzuki and 3% for M&M.

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Industry volumes are likely to be better sequentially, but lower in comparison to 2019 levels, as demand is subdued for low-income categories. Two-year CAGR for domestic volume is expected to be -2% for Bajaj Auto, -3% for Hero Moto Corp Ltd, -9% for TVS Motors Ltd and -14% for Eicher Motor- Royal Enfield. EIM-RE is likely to report lower volumes due to the changeover to the new-generation Classic 350cc; dispatches for the model are expected to begin with the launch in August 2021. Although domestic volumes would be under pressure, exports are likely to witness positive growth due to healthy demand and stable currency rates in key markets.

Commercial Vehicles

Industry volumes should improve MoM, but still remain notably lower than 2019 levels, as freight availability is still lower than H2FY21 levels and transporters are worried about the possibility of the third wave of Covid-19, resulting in the postponement of purchases. Two-year CAGR for domestic volumes is likely to be at -1% for Tata Motors, -3% for M&M, -14% for Ashok Leyland and -18% for EIM-VECV.

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