Recovery Seen Muted Despite Easing Chip Constraints

Two-wheeler sales volumes in June are expected to rise over the previous month, barring Hero MotoCorp Ltd. Year-on-year, sales were a mixed bag with Bajaj Auto Ltd. declining nearly 8%.

“Recovery in rural demand, likely reduction in prices and improvement in MSMEs business is likely to drive volume of two-wheelers,” Dolat Capital said in its note. It expects demand for mileage bikes like Hero Splendor, Bajaj Platina, Hero HF Deluxe and Honda CB Shine to improve with the opening up of offices and educational institutions.

According to Motilal Oswal, its interactions with leading industry channel partners indicated a decent recovery for two-wheelers in June.

The note, however, said that premium motorcycles above 150cc have been facing chip shortages leading to a waiting period of 15 days for Bajaj Auto.

In the commercial vehicle segment, analysts are seeing subdued demand. “Infra activities have been stalled due to the monsoon. Demand from cargo segment operators with long-term contracts remained buoyant,” Motilal Oswal said in its note. The recent hike in interest rates has also led to some dampening in the conversion of inquiries into sales, it said.

Dolat Capital sees strong demand for medium and heavy commercial vehicles led by strong replacement demand from organised fleet operators.

“Enquiries for ICVs are strong and demand is skewing more and more towards CNG vehicles.”

It expects tractor dispatches to see a sharp fall in volume over the coming months due to high inventory at a dealer level in the industry.