Domestic tractor demand to rebound in remaining months of FY25: Axis Securities

New Delhi [India], December 3 : The domestic tractor demand in the automotive industry will witness a rebound in the remaining months of the financial year 2025 (FY25E) as per a report by Axis Securities
The report said that because of the above-average monsoons, improved reservoir levels, and a bumper Rabi harvest with favourable terms of trade will boost tractor demand in the remaining months of the current fiscal.
The Domestic CV industry sales were flat YoY (down 20 per cent MoM), mainly due to lower MHCV truck volumes, which were partially offset by high bus volumes. The 3W domestic wholesales for Bajaj and TVS declined by 5 per cent and 28 per cent YoY, respectively, while M&M grew by 22 per cent YoY. The domestic tractor industry witnessed flat volume growth YoY.
In the commercial vehicle space, Trucks lag while Buses outshine in this period. In Nov'24, domestic volumes for Tata Motors, M&M, and Ashok Leyland declined by 1 per cent, 1 per cent, and 4 per cent YoY, respectively, while VECV grew by 6 per cent YoY, and MSIL reported 17 per cent YoY growth.
The report expressed a cautiously optimistic outlook on commercial vehicle space adding that it is hopeful on two-wheeler (2W) OEMs over the private vehicle (PV) and Tractor in the medium run.
"On a medium-term outlook, we prefer 2W OEMs over PV and Tractor; and remain cautiously positive on the CV space," the report added.
The 2W total dispatches grew by 3 per cent YoY following the festive season, mainly driven by exports which grew by 32 per cent YoY.
The report added that the growth seen in the two-wheeler segment was supported by domestic demand momentum which includes rural demand and new model launches.
Domestic volumes for Bajaj, HMSI, and Suzuki increased by 6 per cent, 3 per cent, and 7 per cent YoY, respectively, while Hero and Bajaj reported declines of 8 per cent and 7 per cent YoY.
The domestic PV sales grew by 6-7 per cent, a decline of 11 per cent MoM, largely due to the weakness in Hyundai and Honda. The figures were partially affected offset by the strong domestic SUV volumes from Toyota, M&M, and MG.
In November 2024, the PV OEMs' domestic wholesales grew by 6-7 per cent YoY but declined by 7-9 per cent MoM. Maruti Suzuki India's entry-level car segment declined by 4 per cent YoY, while its SUV segment grew by 20 per cent YoY, resulting in total PV sales growth of 10 per cent YoY, however the domestic sales were up by 8 per cent YoY.
The total domestic sales remained strong for Toyota, MG, and M&M, with YoY growth of 44 per cent, 45 per cent, and 16 per cent, respectively. Tata Motors reported a 2 per cent YoY increase in domestic volumes, while Hyundai witnessed a 2 per cent decline.
For CVs, the report anticipates low single-digit growth in FY25E across OEMs due to the high base effect, a gradual increase in fleet capacity utilization, and moderate replacement demand in the MHCV truck segment.