Short Call: Auto stocks may disappoint in Q2 as demand falters; Axis Bank, Wipro in focus

Just when the two-wheeler industry seemed poised to lift the spirits of the automobile sector, a slowdown may be looming. Bajaj Auto has added to the mounting concerns, trimming its growth outlook for two-wheeler sales in India to a modest 5 percent—down from its earlier range of 5-8 percent.

For context, two-wheeler sales in September took a sharp hit, falling 10 percent month-on-month and 8.5 percent year-over-year, as weak consumer sentiment, low inquiry levels, and dwindling foot traffic hurt demand. Seasonal factors like the Shraddh period, Pitrapaksha, and heavy rains further dampened the market, leading to delayed purchases and a subdued buying environment.

Meanwhile, the passenger vehicle (PV) segment is in deeper trouble. Sales plunged by 10 percent MoM and a striking 18.81 percent YoY, highlighting a troubling trend of waning consumer interest and growing market pessimism. The combination of seasonal lulls, heavy rains, and an overall sluggish economy has left dealers sitting on alarmingly high inventory levels—around 7.9 lakh vehicles worth Rs 79,000 crore, according to FADA data, with inventory stretching to 80-85 days.

With this backdrop, both dealers and OEMs are now pinning their hopes on festive season sales, especially in rural markets where favourable agricultural conditions and improved cash flow are expected to fuel demand. But the road ahead remains uncertain. A strong October is essential, not just to offload excess inventory but also to set the stage for steady growth through the rest of FY25.