JPMorgan has released its insights on the auto sector, highlighting that the strength in retail sales witnessed during the festive season is likely to moderate in the coming months. October retail strength in passenger vehicles (PVs) was supported by elevated discounts compared to 2023 levels. However, the post-festive decline in PV retails appears sharper than last year, while the two-wheeler (2W) decline aligns with historical trends.
The report notes a cautious stance among auto financiers on 2W lending, with captive financing entities stepping in to support. Demand in rural and semi-urban areas remains stronger than in urban regions. Despite the recent demand boost, new truck demand is unlikely to see near-term growth due to sluggish freight demand and high vehicle prices.
While JPMorgan expects all auto segments to witness some moderation, it sees 2Ws continuing to outperform PVs and commercial vehicles (CVs). M&M, Bajaj Auto, and TVS are JPMorgan’s preferred picks, while Maruti Suzuki and Ashok Leyland are anticipated to face demand pressures in the near term.
Disclaimer: This article is for informational purposes only and should not be considered as financial advice. Please consult a financial advisor before making any investment decisions.
