Two-wheelers may race ahead in 2024
The Nifty Auto index raced ahead in 2023, occupying the slot of the second-best performer among sectoral indices, gaining nearly 48% vis-à-vis the 20% gain in the Nifty 50 index. Investors were excited about volume growth, launches and the resilient margin show put up by the original equipment manufacturers. In particular, the two-wheeler segment saw improving prospects, ending the year smoothly.
While volumes lagged expectations, the segment continued to lead the automobile pack in December. Bajaj Auto Ltd and TVS Motor Co. Ltd’s two-wheeler wholesale volume clocked about 15% and 27% year-on-year growth, respectively.
At the time of writing this, Hero MotoCorp Ltd was yet to report December volume but the general expectation is that it would do well led by higher demand seen in the northern regions, which are strong markets for the company. On the other hand, Eicher Motors Ltd’s Royal Enfield was a disappointment with volume falling by 7%, partly bogged down by weak exports. With deliveries of the new Himalayan picking up pace, volumes could get a boost ahead.
Going into 2024 or FY25, two-wheelers may see better growth rates. Besides a gradual recovering demand environment, a favourable base also helps. Channel checks by Antique Stock Broking indicate signs of improvement in the entry segment two-wheeler demand.
“Dealers are closely monitoring the entry level segment and expect the months of January and February to be important to gauge demand," said the Antique report. For passenger vehicles (PV), while volumes are likely to grow in 2024, the pace needs to be watched, however. Maruti Suzuki India Ltd’s management notes that the pent-up demand seen after the pandemic is waning and the repo rate hikes would be passed on
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