Utility vehicles shine: India's automobile industry witnessed strong growth in several areas while facing challenges in others. The February auto sales reveal a nuanced picture, with certain sectors outpacing expectations while others grapple with subdued demand, analysts noted.

Utility vehicles and two-wheelers lead the charge

The standout performers in February were utility vehicles (UVs) and two-wheelers, both domestically and in terms of exports. Utility vehicle sales surged 39 per cent year-on-year (YoY), signalling sustained consumer interest in this segment, brokerage firm Motilal Oswal said in a note.

Meanwhile, two-wheeler dispatches saw a 21 per cent YoY growth domestically and a staggering 36.5 per cent annual growth in exports, reflecting robust demand both at home and abroad.

Companies such as Hero MotoCorp, TVS, Royal Enfield, and Bajaj Auto spearheaded this growth trajectory, with dispatches surpassing estimates. Domestic demand remained healthy, while the unexpected surge in export figures provided a pleasant surprise amidst challenging circumstances, the Mumbai-based brokerage highlighted.

Passenger vehicles maintain momentum

The passenger vehicle (PV) segment maintained its upward trajectory, with dispatches rising by 17 per cent YoY. Notably, utility vehicle sales contributed majorly to this growth, marking a 39 per cent YoY increase.

Maruti Suzuki and Mahindra & Mahindra emerged as key players in this segment, with Maruti Suzuki also witnessing a notable 68 per cent YoY growth in exports, the highest this fiscal year.

Commercial vehicles and tractors face headwinds

However, the commercial vehicle (CV) and tractor segments faced challenges in February. CV dispatches remained flat YoY, with mid- and heavy commercial vehicles witnessing a 6 per cent decline while light commercial vehicles saw a modest 5 per cent YoY increase. Companies like Tata Motors, Ashok Leyland, and VECV navigated through a period of subdued demand, anticipating a gradual pickup post-elections.

Tractor sales, on the other hand, suffered a setback with a 16 per cent YoY decline. Factors such as erratic monsoons and deficient rainfall in southern and western states impacted agri-related demand, affecting companies like Mahindra & Mahindra and Escorts, Motilal Oswal said. However, the outlook for the Rabi crop appears promising, offering a glimmer of hope for future growth.

The automotive sector remains cautiously optimistic. The recovery in the domestic two-wheeler segment and sustained demand for UVs provide a positive outlook. Additionally, expectations of improved sentiment post-elections may bolster CV demand, while agricultural reforms and government support schemes could potentially revive tractor sales in the coming months, analysts added.

Despite facing headwinds, the Indian automotive industry continues to display resilience and adaptability in navigating through challenging times. As stakeholders monitor market dynamics and consumer sentiments, strategic responses and innovative approaches will be important in steering the sector towards sustained growth and stability in the months ahead.