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Automobiles: 2W retails recovering post initial GST hiccups

  • We interacted with leading 2W mass market channel partners from Andhra Pradesh, Gujarat, Karnataka, Maharashtra and Rajasthan to understand and assess the demand recovery post GST.
  • Most 2W channel partners indicted gradual recovery in retail demand from the second half of July. Our interactions indicate that TVSL, HMSI and HMCL are growing better than BJAUT in retails.
  • Factors such as good monsoon and increase in MSPs have lifted sentiment in rural/semi-urban areas. Pre-festive demand is evident in states like Maharashtra and Gujarat.
  • Channel partners have indicated pre-festive inventory building driving wholesale demand.
  • Floods in Rajasthan and Gujarat are impacting demand in a few regions. Launch of Vahan-4 is halting vehicle registration in few districts of Gujarat.  
Retail sales improving MoM post initial GST hiccups
Retail demand on the ground is showing gradual recovery in the last couple of weeks due to normalization of GST-related anxiety. Further, pre-festive demand beginning with Ganesh Chaturthi in Maharashtra followed by Navratri and Diwali should drive volumes. Currently, in key states such as Rajasthan, Andhra Pradesh, Maharashtra and Gujarat, our interactions suggest retail growth of 5-7%. This is expected to inch up to 10-12% in subsequent months, led primarily by festive demand