Demand for two-wheelers and tractors demonstrated a positive trend in October, according to a report by Motilal Oswal. The report highlights a projected year-on-year growth of 4-5% in two-wheeler sales during the festive season, although this growth faces limitations due to a high base from last year. Inventory levels for both two-wheelers and passenger vehicles (PVs) remain elevated, positioning Diwali as a crucial time to assess stock clearance.
Rural Demand Shows Improvement on Positive Sentiment
Improved rural sentiment, partly due to a favorable monsoon, could bolster demand, though its durability post-festive season remains unclear. Retail sales during Navratri saw mid- to high-single-digit growth across regions, with more subdued sales in rural areas. Demand in these areas may increase around Diwali, with sentiment continuing to improve.
Commercial vehicle (CV) ultimatumremains weak despite the festive season, with projected volumes down around 5% year-on-year. However, slight improvement in fleet utilization levels across regions offers a more positive outlook compared to previous months.
Outlook for Diwali Critical for Auto Sector Inventory
Overall, Motilal Oswal’s report indicates mixed sentiment across vehicle categories, with two-wheelers and tractors showing resilience and PVs and CVs facing a more challenging outlook as the Diwali season approaches.
