Festive Cheer Drives Strong October Auto Sales, Jefferies Forecasts Robust OEM Performance

Investors are keenly observing October auto sales figures, especially following the crucial festive period encompassing Dussehra, Dhanteras, and Diwali. According to a report by Jefferies, strong festive demand is anticipated to translate into solid wholesale numbers for the majority of India's Original Equipment Manufacturers (OEMs). The report indicates that passenger vehicle and two-wheeler registrations rose by 20-23% year-on-year during the initial 32 days of the festive season. This positive trend is expected to result in double-digit growth for many listed auto companies upon the announcement of their October dispatch figures. However, the medium and heavy commercial vehicle segment continued to show weakness, leading to subdued overall commercial vehicle (CV) growth for the month. Despite this, broad-based momentum is observed across passenger vehicles (PVs) and two-wheelers. Tata Motors and Maruti Suzuki are projected to post strong sales, with Mahindra & Mahindra also expected to achieve healthy growth. Specific OEM outlooks include Tata Motors expecting a 20% rise in total wholesales, driven by a 34% jump in passenger vehicles, while commercial vehicles are forecast to remain flat. Maruti Suzuki projects a 14% increase, mainly from domestic dispatches. Mahindra & Mahindra anticipates 11% growth across its automotive and tractor segments. Hero MotoCorp expects a 15% rise, supported by rural demand and improved financing. TVS Motor's volumes are pegged to grow 16%, with scooters and three-wheelers showing strength. Eicher Motors' Royal Enfield is projected for a 13% increase. Bajaj Auto's domestic sales improved, offsetting weaker exports, with an overall volume growth of 8%. Hyundai Motor India forecasts a 7% rise, constrained by production capacity. Ashok Leyland expects a 10% overall increase, with light commercial vehicles showing more strength than medium and heavy ones. The overall retail trend confirms a strong festive base, with two-wheelers and passenger vehicles seeing growth above 20%. The sustainability of this momentum beyond November will depend on continued retail traction. Inventory levels for most OEMs are within normal limits of four to six weeks.

Impact: This news has a significant positive impact on the Indian auto sector and related companies. The strong festive season demand is a key indicator of consumer sentiment and spending power, directly influencing revenue and profitability for auto manufacturers. The divergence between PV/two-wheeler strength and CV weakness also highlights different economic trends affecting various segments of the transport industry. Rating: 8/10.

Difficult Terms: * OEM (Original Equipment Manufacturer): A company that manufactures products which are then sold by another company under its brand name. In the auto industry, this refers to car, motorcycle, and truck makers. * YoY (Year-on-Year): A method of comparing data from a current period with the data from the same period in the previous year to understand growth or decline. * CV (Commercial Vehicle): Vehicles designed for business use, such as trucks, buses, and delivery vans. * PV (Passenger Vehicle): Vehicles primarily designed to carry passengers, including cars, SUVs, and multi-purpose vehicles. * LCV (Light Commercial Vehicle): A smaller category of commercial vehicles, often used for local deliveries or services. * Wholesale numbers/volumes: Sales figures reported by manufacturers to their dealers or distributors, rather than sales directly to end consumers (retail). * Dispatch figures: Similar to wholesale numbers, referring to the number of vehicles sent out from the factory to dealers. * Rural sentiment: The overall economic outlook and confidence among people living in rural areas, which influences purchasing decisions for items like tractors and two-wheelers. * Inventory: The stock of goods (vehicles, in this case) that a company has on hand, ready for sale. * Fiscal year (FY): A 12-month period for accounting purposes. In India, FY26 typically runs from April 2025 to March 2026.