Automobiles Sector Check – Premiumisation Trend Visible In Two-Wheelers, Passenger Vehicles: Motilal Oswal

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We have analyzed model-wise data for two-wheelers and passenger vehicles for year-to-date-FY24. Following are the key highlights:

• In motorcycles, the 100cc segment’s contribution has now fallen to 48.6% in YTDFY24 from 56.9% in FY20. As a result, Hero MotoCorp Ltd. has lost its market share in domestic motorcycles by 300 basis points to 43% for YTDFY24.

• In the 125cc segment, TVS Motor Ltd. has been the biggest outperformer, with its market share rising by ~680 bp to 15.1%. In the 150-250cc segment, Bajaj Auto Ltd. has been the biggest gainer, with a 390 bp jump in market share to 34.6%.

• In the 250cc+ segment, Royal Enfield has lost 400 bp share to new launches from Harley Davidson (through Hero MotoCorp) and Triumph (through Bajaj Auto).

• In PVs, we believe Maruti Suzuki India Ltd. has done well to sustain its share at 42%, despite the fact that the car segment, which contributes to 57% of its mix, has declined by 12% YoY.

• For Maruti Suzuki, Fronx and Grand Vitara continue to drive utility vehicle growth, while Jimny is not doing well.

• Mahindra and Mahindra Ltd.’s biggest growth driver in UVs in FY24 has been Scorpio.

• For Hyundai, the launch of Exter has helped boost volumes in the compact SUV segment without materially cannibalising Venue sales.

• While we expect two-wheelers to continue to outperform other segments even in FY25, this seems fully priced in after the recent strong rally in two-wheeler stocks. M&M is our top pick among Auto original equipment manufacturers as we expect new launches to continue to help the company drive market share gains in PVs.

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