India's two-wheeler and passenger vehicle sales could grow by up to 10% over the full festive season if daily sales sustain their current pace, according to Systematix Group. The forecast comes despite a decline in headline Navratri sales, with the analyst arguing that differences in the festive calendar and last year's GST-related demand shifts make daily sales a better measure of the underlying trend.
Abhishek Ghosh of Systematix said two-wheeler sales rose nearly 7% on a per-day basis during Navratri, while the decline in passenger vehicle sales narrowed to about 16% from 21% after adjusting for the difference in the number of days.
The outlook depends on sales holding up through the remainder of the festive period, which accounts for a substantial share of annual vehicle purchases.
Sales Outlook
Ghosh said two-wheeler sales would need to sustain a daily run rate of around 1.03 lakh to 1.13 lakh units during the remaining festive period for the segment to deliver growth ranging from flat to 10%.
For passenger vehicles, he said a daily sales run rate of more than 18,000 to 20,000 units could support a similar growth outcome over the full festive period.
The analyst said Navratri accounted for about 21% of total festive sales last year, leaving most of the 42-day festive period still to play out. He said the final outcome would depend on the pace of sales over the remaining days.
The estimates offer a different perspective on the initial Navratri figures, which showed passenger vehicle registrations falling 13.66% year on year in the first nine days, according to provisional industry estimates shared by the Federation of Automobile Dealers Associations.
Demand Trends
FADA President Sai Girdhar said demand remained supported by customer enquiries and bookings at dealerships. He said rural demand was outpacing urban demand, with income from non-farm activities contributing to rural purchases.
Girdhar said the effect of higher interest rates had not yet materially affected auto retail demand and that affordability continued to support vehicle purchases. He also cited 27% growth in electric vehicle sales compared with the year-earlier period.
He attributed part of the gap between this year's and last year's passenger vehicle sales to the changes in goods and services tax rates announced in August and implemented on September 22. Buyers had deferred purchases and registrations to benefit from the revised rates, he said, affecting the comparison with the previous year.
Earnings Risks
Ghosh said the auto sector faced a higher base of comparison in the second half of the financial year, alongside rising raw material prices. He said he was selective on auto stocks and preferred companies that could offset these pressures through premiumisation or their ability to pass on price increases without hurting demand.
He favoured Eicher Motors, TVS Motor and Bajaj Auto in the two-wheeler segment, Hyundai Motor India among passenger vehicle makers, and Tata Motors in commercial vehicles.
Ghosh said Bajaj Auto's limited dependence on the domestic motorcycle market reduced its exposure to changes in that segment. He also cited Hyundai Motor India's upcoming product cycle and Tata Motors' expanded addressable market following the Iveco transaction as factors supporting his preferences.
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