The automobile industry’s wholesale volumes were largely in line with estimates for passenger vehicles (PV) and medium-heavy commercial vehicles (MHCVs), whereas the two-wheelers (2W) disappointed, a global brokerage firm Nomura said in a May auto sales review report.

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The key surprise has come from Mahindra and Mahindra with strong order book and as production constraints normalized as well as from Ashok Leyland, Nomura said, noting that there are strong base effects as April-June 2021 as well as April-Jun 2020 volumes were impacted by the Covid waves.

EV volumes dipped to 3.24 per cent in May from 4.1 per cent in April 2022 as OEMs faced a supply crunch. Okinawa was the EV-2W leader in May-22 with 9.3k retails and Ola was number 2 at 9.2k.

Among the incumbents, the Hero Motocorp EV unveil that had been planned for July has now been delayed to around the festive season, the brokerage firm said.

Overall, PV demand remains skewed toward new launches / EVs / CNG / SUVs, while entry-segment cars and 2Ws remain weak, reflecting weak demand from mass consumption segments, it added.

The brokerage maintained FY23F industry growth at 50 per cent for MHCVs, 20 per cent for PVs and 11 per cent for 2Ws. It said, the recent government initiatives will lead to further moderation in steel prices and with OEMs having already taken price hikes, 1QFY23F margins may have upside risks.

Nomura prefer suppliers that have demonstrated the ability to leverage on the rising content per vehicle trend such as Sona Comstar, Sansera and Bharat Forge with Buy rating.

And, prefer M&M Buy due to its strong model cycle in autos and attractive valuations, while Ashok Leyland and Tata Motors suggested Buy rating, on its cyclical uptick in MHCVs and potential market share gains in PVs and EVs.