Emkay Global Financial Services, Auto News, ET Auto
New Delhi: The second wave of COVID-19 and statewide lockdowns are expected to affect auto sales volumes in May 2021. Compared to May 2019, volumes are expected to fall by double digits in all segments in May 2021, according to a report by Emkay Global Financial Services.
Emkay compared the volumes to the 2019 figures as the volumes are not comparable due to the weak base last year. Tractors and passenger vehicles should experience less reduction than two-wheelers and utility vehicles. Due to the lifting of lockdowns and pent-up demand, Emkay Global Financial Services expects a rapid recovery in volumes from the second quarter of fiscal 2022.
Agricultural activities in the field were not much disrupted by the second wave. Although considered an essential category, tractor volumes must remain low due to the severe impact of the pandemic on rural areas. Domestic volume is expected to grow at a two-year compound annual growth rate of 21% for escorts and 23% for M&M Auto.
Despite a healthy order book for most OEMs, volumes in the passenger vehicle industry are expected to be slow. Domestic volume is expected to grow at a CAGR of 4% over the next two years for Tata Motors domestic CV, 31% for M&M and 49% for MSIL (Maruti Suzuki)
Volumes in the 2W industry are expected to be low. The two-year CAGR for Royal Enfield’s indoor volume is expected to be 43%, 51% for Bajaj Auto, 54% for TVS Motors and 58% for Hero MotorCorp.
Due to lower freight availability, commercial vehicle industry volumes are expected to be under pressure, forcing carriers to postpone purchase orders. Domestic volume CAGRs are expected to be 55% for M&M Auto, 59% for Ashok Leyland MHCV, 60% for Eicher Motors CV and 61% for Tata Motors over the next two years.
Emkay Global Financial Services’ positive outlook for the automotive sector is supported by expectations of a strong cyclical recovery lasting at least three years.