Unlike previous months, commercial vehicles are likely to show recovery and maintain positive momentum on the back of healthy freight availability and better freight rates. While the passenger vehicle volumes are likely to be hit by the chip shortages, despite a healthy order book, two-wheelers and tractors are likely to decline due to a high base on account of inventory filling last year, according to the Emkay research. According to various channel checks, commercial vehicle volumes are aided by tippers, ICVs and some replacement demand for multi-axle vehicles (MAVs). Over 2.1 million E-way bills are generated per day, which is higher than pre-COVID levels, clearly showing the economic activity's revival, leading to the mobilisation of trucks. Hence the demand is picking up. Sales of CVs are expected to continue their trend of MoM growth led by rising MHCV demand as the economy opens up. MHCV volumes are picking up on the back of rising infrastructural activities and increasing freight availability, while the e-commerce segment supports LCV volumes. Also, pickup in Real Estate demand further improves freight availability, as per Prabhudas Lilladher research report. On the other hand, despite robust demand and healthy order books, passenger vehicle segment volumes are likely to hit due to the semiconductor shortage. Due to which many carmakers have already announced the production cut in the month of September. However, Nirmal Bang expects PV volumes to be affected by supply chain constraints. It expects a faster normalisation and the segment to recover faster on the back of easing lockdown restrictions, sustained demand, low inventory levels, high waiting periods and growing preference for personal mobility. He expects Maruti to post an overall volume of 94,000 units.
On the two-wheeler front, the segment remains sluggish while the dealerships witness improving enquiries MoM; however, the sales conversion ratio remains low. Experts indicate that recovery is gradual and followed by four-wheeler recovery with three four-month lag. Dealers of major OEMs such as Hero MotoCorp have inventory levels of 8-12 weeks, while TVS and Bajaj dealers possess 6-8 week inventory. According to Emkay's research, two-wheeler industry volumes are likely to be significantly lower compared with last year due to a high base on account of inventory filling. In addition, chip shortages have affected dispatches for premium motorcycles. Similarly, Tractor volumes are likely to decline due to a high base. Nirmal Bang expects tractor demand to ease due to a high base. However, he observes that underlying rural sentiments are holding reasonably well, supporting volume going forward. Further, a reasonable monsoon season bodes well for the tractor industry. 'We expect M&M to report a tractor volume of 35,000 units,' it added.