Indian auto stocks came under significant selling pressure on Dalal Street on Thursday, October 22 as Bajaj Auto, a leading manufacturer of two-wheelers (2W) and three-wheelers (3W), expressed caution regarding festive demand during the announcement of its September quarter results. As the first automaker to release its September quarterly numbers, Bajaj Auto’s disappointing forecast significantly dampened investor sentiment.
Analysts and investors had anticipated a strong rebound in sales during the festive season, a crucial period for the automotive industry traditionally characterized by increased consumer spending. As a result, the Nifty Auto index plunged 8% in the last 7 days with today’s intraday trade, hitting 24,257, marking its lowest level since mid-June.
Mahindra & Mahindra was at the forefront of the losses, witnessing a substantial decline of 10% in the last 7 days. Other major players in the two-wheeler segment, such as TVS Motor Company, Hero MotoCorp, and Eicher Motors, also saw their stocks tumble, down the 5-10% range.
In addition, shares of passenger vehicle (PV) manufacturers, including Maruti Suzuki India and Hyundai, also faced declines ranging from. The current slump in the auto sector has contributed to a 10% loss in the Nifty Auto index for October thus far, marking the steepest monthly drop since February 2022.
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The Indian automotive sector faces significant challenges with declining sales trends. Car manufacturers experience their most difficult period, with sales dropping notably in September and continuing into Q2FY25. SIAM data reveals that sales to dealers decreased for the first time in ten quarters during the September quarter.
Automakers witnessed a 1.8% year-on-year decline in dealer sales, reaching about 10 lakh units in the second quarter. Even more concerning, FADA reports a steeper 4.5% drop in actual sales to consumers during this period. The SUV segment, previously the industry’s growth driver, recorded a significant 9% slump in September, falling from a
robust 23.5% growth the previous year.
Small car sales saw a sharp decline of nearly 20%, affecting major players like Maruti Suzuki and Tata Motors. Kotak Institutional Equities has revised its forecast downward, now expecting a 1% decline in domestic passenger vehicle wholesale volumes for FY2025, compared to their earlier projection of 3% growth.
This adjustment stems from various factors, including high inventory levels from weak demand trends, slowing SUV growth due to a high base, declining order books, and
persistent weakness in entry-level segments. While the festive season showed some promise with low single-digit growth, experts warn that further slowdown could impact wholesale volumes.
Written By: Dipangshu Kundu
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