Passenger Vehicle Sales Slowed Down In February, Say Analysts

The dispatch of passenger vehicles to dealerships slowed down in February with sharp moderation in retail sales, according to analysts.

The higher discounts compared to the same period last year, the reduced waiting periods for key models, and the decline in luxury car sales indicate a slowdown in the category, brokerages said. They expect passenger vehicle retail sales growth to moderate sharply to mid- to high-single digits.

Sales of cars and utility vehicles were the first to rebound during the pandemic on demand for personal mobility. The category has largely driven auto growth as rural slowdown hurt the two-wheeler segment.

Motilal Oswal, however, said there has been an 8-10% drop in inquiries across passenger vehicle companies, which is expected to result in a sequential volume decline for the month.

This, however, may also mean that automakers may not resort to price hikes in April due to new emission norms as it might impact demand.

The price hike due to real driving emission norms was lower than expected in the diesel car category, Nomura said. While there are expectations of further price hikes from April, the likelihood is low as any further hikes may impact demand, it added.