Auto Sales Preview: Festive Boost Likely For Two-Wheelers, Car Sales May Be Sluggish
Last year, festivals like Dussehra and Diwali fell in October, boosting the overall retail sales.
Two-wheeler sales jumped in October as the festive season spurred demand, but sluggishness in small cars limited the growth in retail sales of passenger vehicles during the month, according to analysts.
A combination of factors, such as the inauspicious Shradh period, a festive season boost due to Navratri, and a higher base of last year may have complicated the year-on-year comparison of automobile sales in October.
Last year, festivals like Dussehra and Diwali fell in October, boosting overall retail sales.
“If we look at the Navratri period starting Oct. 15, retails are likely to be flattish for cars, but in healthy double-digits for two-wheelers,” Nomura said in a report.
Analysts attributed the uptick in two-wheeler sales to festive demand and aggressive financing, with a focus on urban markets amid a gradual recovery in rural regions.
For passenger vehicles, the slowdown in entry-level cars weighed on the overall sales in the segment, despite the strong momentum in SUVs.
Retails are expected to have remained flat during the Navratris due to weakness in lower-end segments, despite the execution of the order book and stable demand for high-end models, Motilal Oswal Financial Services Ltd. said. Increasing discounts and a decline in waiting periods indicate gradual softness in demand sentiments, according to the brokerage.
The slowdown in smaller cars may prompt carmakers to reduce production for some models in November, something that has not happened since Covid period, Nomura said.
In the commercial vehicle segment, the growth in the medium and heavy commercial vehicle categories is likely to lift overall sales.
After a sustained reduction in discounts over the past few months, the companies maintained pricing discipline in October as well, which should augur well for the industry margin, analysts said.
The mismatch of the festive period as compared with last year is expected to reflect sharply on tractor sales. Combined with slowing demand, the tractor dispatches may have fallen in low double-digits in October.
