Owing to increase in excise duty and lack of demand, car sales in February mirrored dismal January figures.
Owing to increase in excise duty and lack of demand, car sales in February mirrored dismal January figures with top two carmakers Maruti Suzuki and Hyundai Motor posting single-digit growth of 8.2% and 9.7% growth, respectively.
India's biggest car maker Maruti Suzuki sold 107,892 units in February as against 99,758 units a year ago with its bread and butter brands Alto and WagonR selling 39,988 in the last month.
Hyundai's sales increased from 37,305 in February 2015 from 34,005 units in the same month last year.
Tata Motors and Honda Cars posted double-digit growth of 22% and 16%, respectively due to a low base and new launches by Tata Motors. On the other hand, Mahindra and General Motors witnessed a de-growth of 6% and 23% in passenger car sales last month.
Kunj Bansal, chief investment officer, Centrum Broking, said, "Although passenger car sales are showing a mixed trend due to the excise duty hike, Maruti Suzuki is performing well despite a higher base due to quality product strength and distribution reach."
At 3%, the minimum support price (MSP) has been the lowest this year against the historical average of 7-8%, which crimped rural demand. Urban areas are also grappling with the issue of low growth in wage rate while the inflation is high, thus reducing the savings rate.
Vinay Khattar, head of research, Edelweiss Securities, said incremental demand pick-up in rural and urban areas hasn't happened yet.
Tractor demand continued to be dismal with Mahindra & Mahindra and Escort sales down by 36% and 25%, respectively in February.
Bharat Gianani, auto analyst, Angel Broking, said the direct impact of deficient monsoon and weak sentiment has been on tractor sales.
On the two-wheeler front, Bajaj Auto proved to be the biggest disappointment as its sales was down by 22% while Hero MotorCorp sales were down 3.8%. Meanwhile, Honda Motorcycle & Scooter India, posted a 10% as against negative 2% industry growth.
Scooters are replacing motorcycles in urban areas as they can be used by both men and women, said an auto expert.
The commercial vehicle segment is showing strong growth signs with Ashok Leyland posting 36% growth at 10,762 units while M&M and Tata Motors grew by 21% and 11%, respectively.
"Commercial vehicle segment growth has already bottomed out and a growth can been seen in the segment as a result of improved fleet utilisation and fall in diesel prices." said Khattar.
Experts believe that due to increased emphasis on infrastructure spending by the Modi government and overall growth prospective improving, the auto sector will see better days in the second half of next fiscal.
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