Brokerages forecast sluggish trend in car sales in August as well

Auto companies release their monthly sales numbers on the first day of every month.

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26 Aug, 2025 12:21

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Automobile companies are set to release their monthly sales numbers for August from September 1 and brokerages anticipate continued softness due to slow demand and elevated inventory levels.

This comes after a 2.5 percent year-on-year decline in passenger vehicle sales for July to 3.41 lakh units, likely driven by moderated demand and inventory adjustments.

Brokerage firm Motilal Oswal Financial Services stated that demand trends in August also remained weak in most segments, except for two-wheelers as customers deferred purchases, especially for passenger vehicles, expecting better discounts in September.

However, Nomura has a hopeful outlook to offer for automobile players. The firm believes that a pickup in demand during the festive season, which will arrive 11 days earlier in 2024 (Diwali on November 1, 2024, compared to November 12 in 2023), could help normalise inventory levels. "This shift is expected to result in a much stronger October 2024 and a weaker November 2024 on a year-on-year basis. Additionally, early indications of rural sentiment are positive, bolstered by monsoon rainfall being 7 percent above normal levels," Nomura added.

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For two-wheelers, MOFSL expects retail sales to grow 1-3 percent on year in August. "Walk-ins and enquiries are improving ahead of regional festivals (Ganesh Chaturthi and Onam) beginning in September," the firm noted.

In addition, a series of new and refreshed launches, like Bajaj Auto's Freedom 125, Hero MotoCorp's Xtreme 125R, and TVS Motors' Jupiter 110cc  are also attracting customers.

Outlook for auto stocks

MOFSL believes that the era of easy gains in automobile stocks are behind us, after the sector enjoyed significant volume growth across segments over the past two years amid a stabilisation in input costs.

Moving forward, the brokerage believes that success will require selective micro strategies to outperform. "In this context, Maruti Suzuki is our top pick among auto original equipment manufacturers (OEMs), as it is well-positioned for the structural shift toward new technologies and market share gains in SUVs," MOFSL said.

The brokerage also favours Mahindra & Mahindra due to its strong presence in the growing SUV segment, a healthy order book, and its advantage in the positive tractor cycle.

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