Mumbai: Auto stocks tumbled as market participants expect significant decline in May sales across the different segments of the auto sector.
The BSE Auto Index fell 1.54 per cent on Wednesday while the Nifty Auto Index fell 1.38 per cent, the second biggest loser among the sectoral indices after metals.
The top losers included Tata Motors (-2.46 per cent), Maruti Suzuki (-2.33 per cent), Eicher Motors (-1.71 per cent), Ashok Leyland (-1.64 per cent), Bajaj Auto (-2.25 per cent), TVS Motors (-2.22 per cent), Hero MotoCorp (-0.99 per cent) and Escorts (-0.85 per cent).
Passenger vehicle, two-wheelers and tractors may see sharper volume decline as compared to medium and heavy commercial vehicles.
Raghunandhan N L, Senior Research Analyst, Emkay Global Financial Services, said, “Weak performance is expected across segments due to the high base effect, purchase deferrals during elections, increasing cost of vehicle ownership, dealer inventory corrections, and financing issues."
Stocks of auto parts makers also tumbled, led by Bharat Forge (-3.64 per cent), Cummins (-3.51 per cent), Exide Industries (-1.55 per cent), Apollo Tyre (-1.92 per cent) and MRF (-0.69 per cent).
Among the passenger vehicle makers, volume decline is expected in the range of 6 to 17 per cent for Maruti Suzuki, Tata Motors and Mahindra & Mahindra. M&M’s volume decline may get impacted relatively less due to new launches, while Maruti’s performance is expected to be affected by lower sales of Dzire, Swift, Celerio, Brezza and Omni models, according to Emkay Global’s projections.
Medium and heavy commercial vehicle sales volumes are likely to decline by 4-8 per cent for Tata Motors and Ashok Leyland, among others, due to surplus capacity with fleet operators, high base, and purchase deferrals during elections.
Two-wheelers could be a mixed bag as volume decline up to 15 per cent is expected in the domestic market for Eicher-Royal Enfield and Hero Moto-Corp, mainly due to rising cost of ownership, while growth is expected for Bajaj Auto and TVS Motors in the range of 3 to 6 per cent.
In case of Eicher Motors, domestic volumes of its most popular product Royal Enfield motorbikes have seen a decline in 19 states, with Delhi and Punjab being the latest additions.
Subdued volume performance came in the wake of notable increase in vehicle prices in the 350cc category motorcycles, weak consumer sentiment and higher competitive intensity in the cruiser motorcycles segment with the entry of Jawa Motorcycles.
Tractor volumes in the domestic market could decline between 8 to 11 per cent for Mahindra & Mahindra and Escorts, mainly because of the high base effect of last year and prevailing weak consumer sentiment.