Auto stocks rally after February PV retail sales rise 11%

Nifty Auto gained more than a percent on Wednesday after the Federation of Automobile Dealers Association (FADA) February retail sales data showed double-digit growth in passenger vehicle volumes. The benchmark auto stocks index along with IT and metals added to the overall Nifty50 gains, keeping the NSE benchmark well above the 15,100 levels.

Passenger vehicle retail sales in February rose 10.59 percent, YoY. PV retails ended February at 254,058 units while the same month last year saw sales of 229,734 units. This growth was majorly due to the low base of last year as India had started transitioning from BS-4 to BS-6 emission norms, FADA said in the release.

Retail sales of PVs in January saw a decline of 4.4 percent. However, two-wheeler, three-wheeler and commercial vehicle registrations continued their fall by 16.08 percent, 49.65 percent and 29.53 percent, respectively.

Meanwhile, tractor sales continued their positive momentum by growing 18.89 percent, the data showed.

“Passenger vehicles witnessed double-digit growth on a low base of last year as India started transitioning from BS-4 to BS-6 emission norms. This coupled with the global semiconductor outrage kept a waiting period of PV as high as 8 months. FADA survey showed that 50 percent PV dealers lost more than 20 percent sales due to non-availability of vehicles,” said Vinkesh Gulati, President of FADA.

“Two-wheelers continued to see sluggish demand as the new wave of Covid in certain states kept customers away. Enquiry levels also narrowed as many educational institutions were still reluctant to open. Fuel prices are at a historic high and have put a dampener in sentiments. This, in turn, has pressed the brake on sale of the entry-level price-sensitive category”, he added.

Meanwhile, global research firm Jefferies said that urban-centric states have started to witness relatively better demand trends for two-wheelers and that scooter wholesale volume growth is picking up.

Premium motorcycles have performed better than entry-level bikes in recent months, Jefferies said.

“We maintain our preference for urban exposure in two-wheelers and prefer TVS Motor and Eicher Motors,” it added.