JULY AUTO SALES - PASSENGER VEHICLE RISES AND TWO-WHEELER FALLS

In terms of sales, the Indian automobile industry overtook Germany in 2022, and it improved it ranking in the sector to fourth place based on industry valuation. With a market value of $100 billion and contributing 2.3% to the GDP, this sector has a bright future. The automotive industry was on the verge of a sales and revenue boom following the pandemic and acute semiconductor chip scarcity that had an impact on the sector globally. However, the ongoing hostility between Taiwan and China and the US's involvement in this geopolitical crisis have raised serious concerns for the sector.

NIFTY AUTO has increased by 7.2% since June's closing price. Additionally, over the last three days, the stock prices of Tata Motors and Maruti Suzuki, two of the biggest participants in the sector, have fallen.

The good news is that the 4-wheeler market has had a banner month in July. The PV (passenger vehicle) segment experienced strong growth in the month and set a new sales record. While sales in the 2-wheeler market have been flat this month, Hero Motocorp Ltd. and TVS have recorded a YoY fall in sales for July, which is mostly attributable to the CPI increase that has affected the lower rungs of the pyramid. Let's now go over the reports from the main industry stakeholders.

PASSENGER VEHICLES

Two-wheeler volumes increased 2% YoY in July 2022, while passenger vehicle volumes increased by 18%. The significant increase in the PV market has been ascribed to the reduction in the shortage of semiconductor chips and the introduction of new models, as indicated by OEMs, which can support this growth for the upcoming months. Sales have increased by 16.3% year over year, however orders for popular models are still pending due to a supply shortfall.

Although midsize vehicle sales have decreased since July 2021, Maruti Suzuki has maintained its leadership in the PV sector. an absence of electronic

components has had a significant impact on local market output. Over 129,800 copies were sold by the company in just one month.

Hyundai has maintained its second place in the PV market with 5% YoY increase and 8% MoM growth, and KIA Motors has entered the top 5 PV sellers in India, despite seeing a slight dip in sales when compared to MoM but a 47% YoY rise.

Due to the popularity of the Nexon model, Tata Motors, the largest stakeholder in India's EV 4-wheelers, has sold more than 4000 units in the EV market. In all, 47,505 units were sold by Tata Motors, of which 43,483 were internal combustion engines (ICE) and 4,022 were electric vehicles.

As the star of the month, Toyota shattered their sales record with 19693 units sold, representing an increase of 19% month over month and a gain of 50% year over year. Sales of the Fortuner and Innova Crysta, two popular hero models, have increased as a result of the rising demand for them since their introduction in India. All eyes are on the Hyrider, which has not yet been released but will help them solidify their market position.

The stock market's response to the trend has revealed a sharp increase in the share prices of NIFTY AUTO and other big automakers. One of the indices that has been performing well for the year 2022 is NIFTY AUTO, which has increased by about 16.3% so far. In Tata Motors, the share price of Bajaj Auto Ltd. has climbed by 3.5% and 1.2%, respectively.

DOWNWARD TREND IN 2-WHEELER SEGMENT

The middle- and lower-income clients of the 2-wheeler segment have reduced their budget for 2-wheeler purchases as a result of the current inflationary scenario and rising pricing. Because of this, key firms like Hero Motor Corp. and TVS have had a slow month for sales. Moreover, the market has been hit by the reduction in export demand.

The wholesale domestic volume increased 6% sequentially and 9% year over year. However, the retail sector, which is down 8% year over year, has sent off strong negative signals. The quantity has decreased to 10.4 lakh units.

For the month of July, Hero and Royal Enfield have fallen short of expectations. Sales of motorcycles fell by 0.9% at Hero Motocorp, while scooter sales fell by 24%.

Due to a drop in exports, Bajaj Auto Ltd. also recorded a 4% decrease in revenue. Low-end motorcycles like the CT-100, Pulsar, and Plantina gave the lion's share to the local market. The agricultural harvest and the holiday season may save the segment, and it is anticipated that they will result in a strong growth in the months to come.

CONCLUSION

Even though the automotive sector received a break in July, the geopolitical unrest between China and Taiwan may lead the market to shake. Taiwan can have a significant negative impact on the automotive industry as well as the pricing of automotive shares because it produces 64% of the world's semiconductor chips and accounts for 15% of the GDP. The largest semiconductor chip manufacturer in Taiwan, TSMC, has stated that the onset of war could have an impact on the global vehicle industry since it may force it to cease operations. Future developments in this issue and the festive season will determine the performance of the future months of this industry.