No festive cheer for auto cos in March: PV sales ‘flattish’, 2Ws to see a slight uptick

No festive cheer for auto cos in March: PV sales ‘flattish’, 2Ws to see a slight uptick
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  • India’s auto sector could be looking at mixed performance in March, with some segments likely to clock better growth than others.
  • Passenger vehicles, one of the segments that have been driving sales in the past few months, could be looking at a flat March.
  • Commercial vehicles are expected to continue growing thanks to infrastructure-led demand seeing a healthy fleet utilisation in the medium to heavy commercial vehicles (MHCV) category.
The Indian auto sector could be looking at mixed performance in March due to a combination of erratic rainfall dampening demand for light commercial vehicles (LCVs), and a moderation in demand for passenger vehicles (PVs) during the month, as observed by analysts at Motilal Oswal.

The brokerage expects a slight uptick in demand for two-wheelers during the month on account of festivals and a low base of the previous year. However, concerns about weakness in the rural markets could drag down the overall numbers.

Passenger vehicles, which were in the driver’s seat for a few months now, are expected to clock ‘flattish’ growth during March. “There has been some moderation in enquiries led by muted demand during ongoing festivals and persistent weakness in the rural market,” said the Motilal Oswal report.

Commercial vehicles to drive growth

The brokerage expects the commercial vehicle segment to drive growth in the auto sector in March. More specifically, the medium and heavy commercial vehicles segment is expected to register a 10-12% year-on-year rise in sales due to “healthy fleet utilisation driven by infra-led demand and pre-buying before OBD-2 transition.”


On the other hand, the light commercial vehicle segment is expected to register a decline of 8-10%n due to erratic rainfall and subdued rural sentiments.

Unseasonal rains could also weigh on tractor sales, which could decline 3-5% due to expectations of a low Rabi output.

Moderation in passenger vehicle sales: High interest rates hurt bookings

The entry-level segments have been hurting across the passenger vehicle and two-wheeler segments for a while now. So far, weak rural sentiments and elevated inflation were behind the weak performance of the entry-level segment, but now, analysts suggest high interest rates are also adding to the slowdown.

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

Sports utility vehicles (SUV) continue to be in demand, with waiting periods still being long. For instance, M&M’s popular duo of SUVs, the Scorpio-N and XUV 700 have a waiting period of 3-10 months, and 2-5 months, respectively. The Thar, too, has a waiting period of nearly a month.

Tata Motors’ Nexon, 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’s sales to rise 16% year-on-year, while Tata Motors could see a modest 3% growth. Market leader Maruti Suzuki is expected to report a 3% fall in dispatches.

Slight uptick in two-wheeler sales, but rural demand still weak

Two-wheeler sales have been struggling for a few months now and the pressure is expected to temper a bit during March, with a slight uptick resulting in a 4-6% YoY increase in retail sales, thanks to steady urban demand.

However, erratic rains could dampen two-wheeler sales as well, with rural demand still remaining weak. “Overall sales are still down by 15-17% versus the pre-Covid level as rural demand remains weak,” the Motilal Oswal report added.

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

Market leader Hero MotoCorp could see a 4% YoY decline in dispatches, while Bajaj Auto and TVS Motor could see a 5% fall each. Royal Enfield, on the other hand, is expected to report yet another month of growth, with its dispatches expected to increase 10%. Overall, March could be a mixed bag for the Indian auto industry.


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