Big Festive Season Boost for Indian Two-Wheeler Market, Says Nuvama Wealth Report
The Indian automobile market is set to experience a significant surge of over 15% during the upcoming festive season, particularly in the two-wheeler (2W) segment, according to a research report by Nuvama Wealth Investment Limited.
Key Drivers of Growth
The growth is driven by increased enquiries and a revival of rural demand, which accounts for more than 55% of the 2W market. Enquiries have also gone up for passenger vehicles (PV), with rural demand likely to push growth in this segment as well.
Beneficiaries
Mass-market original equipment manufacturers (OEMs) like TVS Motors, Hero MotoCorp, and Bajaj Auto are expected to benefit the most, as opposed to premium OEMs like Eicher Motors, which manufactures Royal Enfield (RE) motorcycles. New models, including TVS Jupiter and Hero Xtreme 125R, are expected to support 2W sales growth.
Passenger Vehicles and Utility Vehicles
In the PV segment, rural demand constitutes over 35% of the market share, with growth expected in the single digits during the festive season. Utility vehicle (UV) sales are likely to witness double-digit growth, outpacing hatchbacks. This trend will benefit manufacturers such as Mahindra & Mahindra and Tata Motors over Maruti Suzuki, with new models like the Mahindra Thar Roxx and Tata Currv expected to attract customers.
Inventory and Confidence
In anticipation of strong festive demand, dealers have increased inventories for 2Ws and PVs by up to 1.5 to 2.5 months. This increased inventory build-up suggests confidence among manufacturers and dealers alike, who expect a surge in sales during the festive period.
Commercial Vehicles and Tractors
Commercial vehicle (CV) sales are likely to grow at a modest pace, with demand for medium and heavy commercial vehicles projected to rise in single digits. This growth will be driven by replacement demand as freight availability continues to improve across the country. Tractors are expected to perform well over the financial years 2024-26, with volume growth likely in the high single digits.
Long-Term Outlook
Looking ahead, the report adds that the long-term outlook for the 2W and tractor segments remains strong. Historical data suggests that the sales cycle, which typically spans two to four years, could see peaks in the next few years, supporting higher volume growth for 2Ws and tractors as compared with PVs and CVs. The report forecasts a high single-digit volume growth for 2Ws and tractors over FY24-26E, while PVs and CVs are likely to grow in low single digits.
Doubts Revealed
Nuvama Wealth Report -: Nuvama Wealth Report is a study or analysis done by a company called Nuvama Wealth, which looks at how money and investments are doing in different markets.
Two-wheeler -: A two-wheeler is a type of vehicle that has two wheels, like a motorcycle or a scooter. They are very common in India for personal transportation.
TVS Motors -: TVS Motors is a big company in India that makes two-wheelers like motorcycles and scooters. They are one of the popular brands in the country.
Hero MotoCorp -: Hero MotoCorp is another large company in India that manufactures two-wheelers. They are known for making motorcycles and scooters that many people use.
Bajaj Auto -: Bajaj Auto is a well-known Indian company that makes two-wheelers and three-wheelers. They are famous for their motorcycles and auto-rickshaws.
Passenger vehicles -: Passenger vehicles are cars that people use to travel. They can include small cars like hatchbacks and bigger cars like utility vehicles.
Utility vehicles -: Utility vehicles are larger cars that can carry more people or goods. They are often used for family trips or transporting items.
Hatchbacks -: Hatchbacks are small cars with a rear door that swings upward to provide access to the cargo area. They are popular for being compact and easy to drive in cities.
Commercial vehicles -: Commercial vehicles are used for business purposes, like trucks and buses. They help in transporting goods and people for work.
Tractors -: Tractors are strong vehicles used mainly in farming. They help farmers plow fields, plant seeds, and do other agricultural tasks.
