No Uptick In Auto Sales In February, Say Analysts
Automakers’ sales will remain muted in February because of weak demand from consumers and inventory stuck with dealers, according to a BloombergQuint poll of analysts.
Wholesales remained subdued in the past few months, including in the festive quarter last year, as higher fuel prices and upfront insurance costs hurt retail demand. Even year-end discounts failed to stimulate buying.
Industry interactions indicate that retail demand remains weak across segments in February, said Kapil Singh, research analyst at Nomura. “Inventory levels remain elevated for two-wheeler companies which would keep their wholesales muted.”
Here’s what brokerages had to say:
- Expects passenger vehicle sales to grow 2 percent to the level seen last year.
- Market leader Maruti Suzuki outperformed industry growth rates.
- Medium and heavy commercial vehicle and two-wheeler sales are expected to decline 2-3 per cent year-on-year.
- New launches like Maruti Wagon R, Tata Harrier, Nissan Kicks and M&Ms XUV300 are likely to aid volumes in February and in months ahead.
- Passenger vehicle demand remains mixed across major markets as enquiry-to-sales conversion remains weak for existing models.
- Commercial vehicle sales growth may decline due to muted demand.
Key markets for automobiles such as Maharashtra, Gujarat, Delhi and Madhya Pradesh continued to see a decline in retail. We prefer stocks of car makers due to their stronger volume growth and stable competitive environment.Jinesh Gandhi, Research Analyst, Motilal Oswal
Here are the factors, according to Nomura, that could impact sales for individual automakers:
- Expects 9 percent growth in medium and heavy commercial vehicle sales.
- Growth in export markets seen in double digits. Domestic two-wheeler sales are expected to grow over 8 percent in February to the levels seen a year ago.
- Growth in Royal Enfield business to slow due to weak demand.
- Higher inventories at dealerships would mean lower wholesales.
- New launches and lower inventory levels to aid growth.
Mahindra & Mahindra
- New launches to boost auto segment growth, tractor sales to remain muted.
- Both passenger vehicles and commercial vehicles segments expect to see decline in growth rates.
- Export market sales seen declining year-on-year.