Monsoon Drives Rural Demand For Automobile Sector: HSBC

New Delhi: The above-average monsoon is driving rural demand for the Indian automobile sector, and tractor demand maintains momentum following the good rabi harvest, a report showed on Tuesday. Channel partner commentary signals the higher number of auspicious days for marriage and a good rabi harvest sustained two-wheeler (2W) growth momentum in May, reports HSBC Global Research in a note. Electric four-wheeler (e4W) penetration increased to 3.4 per cent in May. Tata's market share remained at 35 per cent, with MG at 31 per cent and M&M at 20 per cent. Hyundai with its 'e Creta’ model was at 5 per cent.

“Meanwhile, e2W sales penetration increased to 6.1 per cent with 100,000 units in retail sales. TVS's retail in May totalled 25,000 units, while Bajaj's sales were at 22,000 units. Ola is in the third spot,” according to the note. Passenger vehicle (PV) demand was largely muted and there are no signs of recovery any time soon. Positively, original equipment manufacturers (OEMs) maintained inventory discipline.

“We expect the PV discount to stay elevated around the current level amid a weak demand outlook,” said the report.