Shares of automobile companies faced selling pressure in Tuesday's early morning trade, falling 2 to 5 per cent, after data showed that sales of four- and two-wheelers almost halved in August, compared to the equivalent month last year.
Among individual stocks, Maruti Suzuki's stock dipped 2 per cent, Mahindra & Mahindra and Eicher Motors slipped 3 per cent each, and Tata Motors slumped 5 per cent. On the other hand, Hero MotoCorp rose 1.9 per cent even though the automarker reported nearly 21 percent year-on-year (YoY) dip in sales to 543,406 units.
The numbers indicate the upcoming festive season may not be enough to revive customer sentiment. This also led to fears that contrary to automakers’ expectations that car sales have bottomed out, the worst may not be over.
The industry expects that the recent initiatives by the government to boost liquidity in the market will show results from this month, as per this Business Standard report. The finance ministry recently announced measures that include giving policy certainty over Bharat Stage VI vehicles and merging public-sector banks.
Analysts, though, are not optimistic. “A turnaround in the industry is months away since any of the measures recently taken to deal with the sales slowdown or to prop up consumer sentiment will take time,” said Sridhar V, partner, Grant Thornton India LLP.
At 10:00 am, the S&P BSE Auto Index was down 0.7 per cent or 109 points at 15,660, as compared to 0.93 per cent decline in the S&P BSE Sensex.