Passenger vehicle sales are set to rise 15-16% in September despite price hikes, a report says. The overall auto market is positive ahead of the festive season, but uneven monsoons and sluggish tractor sales pose challenges.

Passenger vehicle retail sales are expected to grow 15-16 per cent for September as consumer appetite remains steady, even as manufacturers implement selective price increases across the sector to counter input cost pressures, according to a research report by Yes Securities. The overall domestic automobile retail market maintains positive momentum across segments excluding tractors, driven by strong channel confidence ahead of the festive period.

Overall Market Sentiment and Festive Outlook

"Auto industry retail remains firmly positive with double-digit growth across segments (ex-tractors) even though weak monsoon spread is an emerging risk to volumes," the report stated. However, uneven monsoon distribution across several regions continues to emerge as a notable operational risk to broader retail volume expansion.

"The channel remains confident about the positive festive-to-festive growth, albeit with some emerging caution around monsoon uncertainty begins to weigh on sentiments from markets like North, East and South," the report noted.

Passenger Vehicle Category Insights

Within the passenger vehicle category, updated product portfolios are supporting dealer volumes. The broader sector also rolls out price hikes ranging from 0.3 per cent to 0.4 per cent to pass on raw material inflation.

"The recent CNG-AMT launches could further accelerate CNG adoption in private urban markets, with strong initial inquiries already evident," the report noted. "This, we think, will have more of a strategic move rather than just a CNG line up extension as it addresses product gap," the report added.

Two-Wheeler Sector Performance

In the two-wheeler sector, urban markets show stronger traction than rural territories. Urban two-wheeler retail growth tracks at 15 per cent for the month, while rural retail growth moderates between 8 per cent and 10 per cent. This moderation stems from erratic monsoon patterns alongside calendar-related factors such as the onset of Adhik Maas.

Commercial Vehicle Segment Outlook

In the commercial vehicle segment, inquiry pipelines remain steady despite regular seasonal softness in September retail. Original equipment manufacturers actively replenish dealer network stockpiles from existing levels of 20 to 22 days up to around 30 days ahead of expected 1 per cent to 2 per cent price hikes in October.

Tractor Segment Faces Headwinds

On the other hand, the tractor segment faces a sluggish period. Retail growth is projected to moderate to flat or low-single digits during September, as persistent rainfall deficits across northern and eastern pockets curtail rural buyer confidence ahead of the festive season. (ANI)

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