As anticipated in our last note post our channel checks, we witnessed positive volume growth for PVs and 2Ws in May-14. Commercial vehicles continue to remain impacted by lower volumes. Tractors, post strong volume growth in FY14, witnessed sharp moderation in volumes over Apr-May, according to HDFC Securities.

''PVs registered a 8% YoY growth in volumes in May-14 (post 6% decline in FY14). 2Ws continue to report strong uptick in volumes with 16% growth for the month (+7% in FY14) led by strong rural sales and scooters demand. Post 20+% growth in FY14, tractors registered a sharp decline in Apri-May 2014 reflecting initial signs of agri weakness. Monsoon remains the key to tractor demand in near term. CVs remained weak with 35% decline,'' it said.

''We believe the demand revival has to be more fundamental driven led by better macros, decline in fuel/finance costs and better consumer sentiments. Hero MotoCorp (Buy, TP Rs 2,662/sh), Maruti Suzuki (Buy, TP Rs 2,120/sh) and Tata Motors (Buy, SOTP  Rs 468/sh) remain our preferred picks in autos,'' it opined.

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