Auto, Auto Ancillary Q2 Preview - Volume Growth Driven By 2W While Exports Showed Signs Of Recovery: DRChoksey

Deven Choksey Research Report

The auto sector has faced challenges over the last few quarters, including inventory pileup, supply chain disruptions, and fluctuations in market demand.

In Q2 FY25, lower consumer demand, and the Shraddh period have impacted overall sales, causing a YoY decline in retail across various categories. Despite festivals like Ganesh Chaturthi and Onam, auto dealers report stagnant performance and underwhelming market sentiment, suggesting potential flat or negative growth.

Discounts and offers aimed at stimulating demand have not yet led to significant sales improvement.

In Q2 FY25, overall retail sales volume varied across categories: two-wheelers increased by 4.7% YoY, and three-wheelers by 4.9% YoY driven by strong demand and rural growth. However, passenger vehicle sales declined by 5.1% YoY mainly due to declining consumer demand and high inventory levels. Commercial vehicle declined by 3.8% YoY led by low government spending and seasonal challenges.

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