Two-wheeler exports got a jump-start in February. That may not last
Hero MotoCorp Ltd and Eicher Motors Ltd’s Royal Enfield motorcycles. But this could be a one-time boost. “We expect this volume (growth in exports) to be one-off due to aggressive inventory built up in anticipation of increasing freight costs ahead due to the Red Sea crisis," Antique Stock Broking analysts said in a report on 4 March.
Export markets continue to be plagued by high levels of inflation and currency availability issues. Thus, the trajectory of export volumes for two-wheelers needs to be keenly watched. In any case, the domestic market for two-wheelers is on a strong footing.
The entry-level segment is reviving, evident from Hero’s nearly 17% year-on-year growth in its domestic volumes in February. Hero’s portfolio primarily caters to the mass segment. Overall, Kotak Institutional Equities estimates the domestic two-wheeler segment volume to have grown over 20% year-on-year in February.
On the other hand, Kotak estimates the domestic passenger vehicle industry to have grown in low double digits in February, led by utility vehicles. Mahindra & Mahindra Ltd clocked the highest growth rate of nearly 40% year-on-year (domestic) among publicly listed makers of passenger vehicles. While Maruti Suzuki India Ltd saw a nearly 83% jump in its utility vehicle volumes, the mini and compact segment saw a 15% drop.
Overall, “we estimate industry inventory at about 300,000, with some more scope for further channel filling until March-24. Thus, discounts have also started inching up earlier this year," said Nomura Financial Advisory and Securities (India) in a report on 1 March. Channel filling refers to sales of vehicles by companies to retail dealers.
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