Morgan Stanley said Indian automobile manufacturers continue to express confidence in near-term sales volumes, supported by rising demand for alternate powertrains such as battery-electric vehicles (BEVs) and compressed natural gas (CNG) models.
The bank highlighted concrete booking trends at several major manufacturers. Maruti Suzuki India Limited reported a 40% rise in CNG bookings alongside a 100% increase in battery-electric vehicle bookings. Tata Motors has seen BEV bookings rise by a factor of 2.5. Two-wheeler maker Hero MotoCorp is responding to stronger interest by increasing planned production capacity from 20,000 units to 30,000 units.
Alongside demand strength, manufacturers are managing input-cost pressures. Morgan Stanley indicated commodity cost headwinds are running in the range of 4% to 6% for the industry. Companies have applied measured price increases to customers, but a portion of these commodity-driven cost increases remains unabsorbed as firms weigh growth targets against margin preservation.
On supply-chain issues, manufacturers reported challenges tied to manpower and the availability of gas, but the commentary suggested these constraints are stabilizing rather than deteriorating further. Export prospects differed across firms: Maruti Suzuki and Hero MotoCorp signaled robust export momentum, while others cautioned that oil-dependent markets and near-term developments in the Middle East region present export-related challenges.
The picture painted by Morgan Stanley is one of demand shifting toward alternative powertrains even as the sector navigates input-cost inflation, partial pass-through of price increases, and varied export dynamics. The commentary underscores a balance for automakers between capturing demand growth in new powertrain segments and protecting profitability amid lingering cost and regional uncertainties.
Sector implications
- Automotive manufacturing - demand dynamics and pricing strategies are central.
- Energy and commodities - input-cost movements affect margins.
- Trade and exports - regional headwinds may influence international volumes.