Low Base To Keep Auto Sales Buoyant In February

Retail sales in India's automobile industry for February are expected to grow over the same month last year when the volumes were yet to recover after demonetisation.

Growth is expected to be led by two-wheeler and passenger vehicle sales which may have benefited from strong rural demand and a slew of new product launches, according to analyst reports.

Japanese brokerage Nomura said the two-wheeler industry growth will remain healthy at 18 percent due to the low base and the early onset of festive demand. Passenger vehicle sales too will grow around 8 percent over last year with industry leader Maruti Suzuki India Ltd. outperforming the rest as it launched a new variant of its popular hatchback Swift.

Truck sales growth too is expected to remain strong at around 12 percent but could've been better had it not been for capacity constraints, both Nomura and Nirmal Bang said in separate research notes. Medium and heavy commercial vehicle makers also increased prices in January and reduced the discounts. Nomura said this would benefit company margins in the quarter ending March.

While the auto industry is expected to grow on a yearly basis, it is seen moderating from the previous month. That's because original equipment manufacturers had fewer despatch days available to supply various models to their dealers, Nirmal Bang said. The low base effect too will now taper going forward as auto sales started gaining momentum around this time after the steep fall due to demonetisation.

Also Read: Automakers On Course For Double-Digit Sales Growth In February