Auto stocks fall after FADA reports weak November retail sales; Tata Motors, Hyundai shares down about 1%

The weakness in auto stocks is due to demand concerns, particularly in the passenger and commercial vehicle segments.

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Auto stocks fell on Monday, with leading names like Hyundai Motor and Tata Motors witnessing significant losses, after the latest retail figures for November showed a year-on-year drop in passenger and commercial vehicle sales. The Nifty Auto index slipped 0.44 percent, reflecting subdued market sentiment.

Hyundai Motor share price fell 1.2 percent to Rs 1,838, emerging as the top loser among auto majors, while Tata Motors declined 0.7 percent to Rs 811. Maruti Suzuki and Mahindra & Mahindra (M&M) also recorded losses, down 0.4 percent and 0.3 percent, respectively, amid concerns over weak passenger vehicle sales and high inventory levels.

The broader markets also traded in the red, with the BSE Sensex down 275 points or 0.35 percent at 81,434 and the NSE Nifty slipping below 24,600.

The slide in auto stocks came after the Federation of Automobile Dealers Associations (FADA) reported a 13.7 percent year-on-year drop in passenger vehicle registrations to 3.22 lakh units for November. Commercial vehicle sales also fell by 6.1 percent during the period to 81,967 units, reflecting uneven demand recovery.

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The weakness in auto stocks is due to demand concerns, particularly in the passenger and commercial vehicle segments. Inventory levels in the PV segment, although reduced, remain high at 65-68 days, posing additional challenges for dealers, said FADA President CS Vigneshwar.

The decline in PV and CV sales was attributed to subdued wedding season demand, spillover effects from the late October Diwali, and weak rural demand. "Although rural markets supported two-wheeler sales, marriage-related purchases failed to meet expectations," Vigneshwar said.

Further, limited new launches, subdued wedding season sales, and a spillover of festive demand into October weighed on November performance, he said.

With inventory levels still elevated in the passenger vehicle segment, and macroeconomic headwinds persisting, new product offerings and stronger rural demand will be crucial to reviving investor sentiment in the automotive sector.

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