No celebratory cheer for auto cos in March: PV sales ‘flattish’, 2Ws to see slight increase


  • India’s auto sector could show mixed results in March, with some segments likely to show better growth than others.
  • Passenger cars, one of the segments that have boosted sales in recent months, could face a flat March.
  • Commercial vehicles are expected to continue to grow thanks to infrastructure-led demand and healthy fleet utilization in the medium to heavy commercial vehicle (MHCV) category.

India’s auto sector could see mixed results in March due to a combination of erratic rainfall dampening demand for light commercial vehicles (LCVs) and a moderation in demand for passenger cars (PVs) during the month, as observed by analysts from Motilal Oswal.

The brokerage expects a slight increase in demand for two-wheelers during the month due to festivals and a low base from the previous year. However, concerns about weakness in rural markets could drag the overall data down.

Passenger cars, which have been in the driver’s seat for a few months now, are expected to show ‘flat’ growth in March. “There has been some moderation in the surveys, led by weak demand during ongoing festivals and continued weakness in the rural market,” the Motilal Oswal report said.


Company cars to drive growth

The brokerage expects the commercial vehicle segment to drive growth in the automotive sector in March. More specifically, the medium- and heavy-duty vehicle segment is expected to register a 10-12% year-over-year sales increase due to “healthy fleet utilization driven by demand for infrared and pre-buying ahead of OBD-2 transition.”

On the other hand, the light commercial vehicle segment is expected to register an 8-10% decline due to erratic rainfall and subdued country sentiment.

Unusual rainfall could also weigh on tractor sales, which could fall by 3-5% due to expected low Rabi production.

Moderation in passenger car sales: High interest rates hurt bookings

The entry-level segments have been hurting the passenger car and two-wheeler segment for a while now. So far, weak country sentiment and high inflation have driven the entry-level segment’s weak performance, but now analysts suggest that high interest rates are also contributing to the slowdown.

“Furthermore, rising interest rates have further hampered bookings for low-end models. Although the inventory level increased to 25-30 days in March versus 20-25 days to the end of February, it is now back to normal levels after three years,” the brokerage said.

There is still demand for SUVs (Sports Utility Vehicles) and waiting times are still long. For example, M&M’s popular SUV duo, the Scorpio-N and XUV 700, have a waiting list of 3-10 months and 2-5 months, respectively. There is also a waiting period of almost a month for the Thar.

Tata enginesNexon, on the other hand, has a waiting period of 4-6 weeks.

Despite a moderation in demand, discounts have been muted, the brokerage noted, adding that it expects M&M sales to rise 16% year over year, while Tata Motors could see modest 3% growth . Market leader Maruti Suzuki is expected to report a 3% drop in shipments.

Slight increase in two-wheeler sales, but demand in rural areas remains weak

Two-wheeler sales have been struggling for a few months now and the pressure is expected to ease somewhat in March, with a slight increase that will result in retail sales increasing 4-6% year-on-year thanks to steady demand in the cities.

However, irregular rains can also dampen two-wheeler sales, while rural demand remains weak. “Overall sales are still down 15-17% from pre-Covid levels as rural demand remains weak,” the Motilal Oswal report added.

The brokerage also witnessed a wide variation in surveys across states during festivals – while Gujarat, Delhi and Karnataka saw a 2-6% year-on-year increase in surveys, UP, Bihar and Maharashtra reported a 4-8% decline.

Market leader Held MotoCorp could see a 4% year-over-year decline in shipments, while Bajaj Auto and TVS engine each could see a 5% drop. Royal Enfield, on the other hand, is expected to report another month of growth, with shipments expected to increase by 10%. All in all, March could be a mixed bag for the Indian auto industry.


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