HSBC in its latest note on the auto sector said that original equipment manufacturers (OEMs) have rationalised wholesales to dealers in order to keep inventory in check ahead of the anticipated GST rate cut. Despite the impending tax changes, the brokerage noted that customer demand remained resilient, with retail sales of passenger vehicles (PV) and two-wheelers (2Ws) showing strength.
Interestingly, HSBC pointed out that the expected GST arbitrage did not dissuade buyers from making purchases, a trend that underscores healthy consumer sentiment. Tractors also stood out as a bright spot in the sales mix.
On the electrification front, the brokerage said penetration of electric four-wheelers (e4Ws) rose to an all-time high of 4.5%, while electric two-wheelers (e2Ws) climbed to 7.6%. This surge, it noted, was driven in part by slower wholesales of internal combustion engine (ICE) vehicles.
Disclaimer: This article is based on brokerage views as cited. The views expressed are those of the brokerage and do not represent investment advice.
