Passenger vehicles and tractors are reporting a strong recovery, broking firm Motilal Oswal Institutional Equities has said in a report.

"Our interaction with leading industry channel partners reflects mixed sentiment of optimism and uncertainty. Most of the markets were open for 15-20 days in Jun-21. Passenger Vehicles and Tractors (+6% CAGR over Jun-19) are the only segments where volumes are higher than 2019 levels, whereas all other segments are materially lower (15-38% CAGR decline) than Jun-19.

2-wheelers are worst impacted as second wave has affected the rural and semiurban markets. Rising fuel prices has further acted as a dampener to the demand as a result enquiry level has not picked up as expected. Inventory remains high at 45-60 days," the firm has said.

According to Motilal Oswal Institutional Equities this segment is better-off then other categories. Enquiry levels recovered to range of 70-80% compared to Jan-Feb'21.

"The demand for CNG vehicle remains strong however supply chain issues (CNG kit and chips) has increased waiting period of CNG vehicles. MSIL comes out to be major beneficiary of increase in CNG model demand," Motilal Oswal Institutional Equities has said.

As far as commercial vehicles are concerned dealers are expecting demand recovery to take place towards the end of 2QFY22 as infrastructure demand is low due to monsoon while cargo demand is still very low. Financiers are quiet aggressive in funding any demand and LTV is stable around 85-90%, the firm has said.