Wedding season, rural demand to drive India's 2-wheeler sales: HSBC
What's the story
HSBC has predicted that the wedding season and a spike in rural demand will drive two-wheeler sales in India. However, the demand for cars and commercial vehicles is likely to stay subdued. This comes after auto manufacturers released their sales data for November. The brokerage firm observed a slowdown in passenger vehicle (PV) retail sales due to the festive season shift.
Discount forecast
High discounts expected amid weak car demand
HSBC noted that PV inventory has risen from six-seven weeks in October, to seven-eight weeks in November. Given the increase and expected weak demand, the firm expects discounts on cars to remain elevated. "We expect PV discounts to remain high amid weak demand and we estimate domestic PV wholesales decline by 0-2% in FY25," said HSBC.
Sales boost
Two-wheeler sales to benefit
HSBC also noted that two-wheeler sales are poised to gain from higher rural demand and the wedding season. This forecast is based on inputs from channel partners who anticipate these factors to keep demand afloat in the coming months. The firm's report comes as Bajaj Auto's domestic volumes declined 7% year-on-year (YoY), even as exports grew by 26%.
Recovery outlook
Commercial vehicle segment to see recovery in 2025
The commercial vehicle (CV) sector is likely to see a recovery from January 2025, dealers said. Despite weak demand in November, the CV industry maintained pricing discipline. However, HSBC's report notes that the overall demand outlook for FY25 remains subdued due to limited improvement in cash flow from government projects. Dealers are predicting flat volumes year-on-year (YoY) in FY25.
Tractor trend
Tractor sales expected to rise in March-April season
HSBC's report also touched on the tractor market, noting an improvement in retail sales in November. Dealers are now anticipating stronger demand during the March-April season due to high reservoir levels and an increase in rural cash flow. This trend suggests a potential boost for the tractor industry in the upcoming months.
EV shift
EV sales trends in November
In November, Ola Electric's market share fell to 25% as TVS and Bajaj Auto narrowed the gap with 25% and 22% market shares, respectively. Electric two-wheeler sales penetration went down by 220 basis points month-on-month (MoM) to 4.5%. Meanwhile, the market share of electric four-wheelers hit a record high of 2.2%. These trends highlight the dynamic shift in the electric vehicle sector.