Why auto stocks are down today? Eicher, Tata Motors, Hyundai, Bajaj Auto and others - Check worst performers

Auto stocks came under heavy selling pressure on Wednesday, September 2, with shares across the sector falling by up to 5% amid a mixed set of August sales numbers and a broader selloff in the Indian stock market.

The Nifty Auto index fell as much as 3.3% during the session, significantly underperforming the benchmark Nifty 50, which declined 1.1%. All stocks in the Nifty Auto index were trading in the red.

Two-wheeler stocks lead the decline

Two-wheeler stocks emerged as the biggest losers in the Nifty Auto pack. Hero MotoCorp and Eicher Motors led the declines, falling 6% and 5%, respectively.

Bajaj Auto shares tumbled 3%, while TVS Motor declined 2.65%. The weakness was also visible among passenger vehicle makers. Maruti Suzuki fell 2%, Tata Motors PV declined 1.4%, and M&M was down 2.5%.

Among auto ancillary stocks, Bharat Forge, Samvardhana Motherson, Bosch, Exide Industries, Uno Minda and Tube Investments of India declined by up to 4%.

August sales data

The sharp sector-wide decline came despite August sales data showing strong year-on-year growth across several segments and automakers.

Passenger vehicle sales in India rose by strong double-digits in August as automakers accelerated factory dispatches to build dealer inventory ahead of the upcoming festive season, anticipating stronger demand. Around 4.48 lakh cars, SUVs and vans were sold during the month, marking a 36% increase from the 3.30 lakh units sold a year earlier, according to industry estimates.

Maruti Suzuki India crossed the 1 million mark in total sales within the first five months of FY27 after selling nearly 1.77 lakh vehicles in August. Tata Motors Passenger Vehicles and M&M also reported robust numbers, with their volumes growing 59% and 50%, respectively, during the month. Hyundai Motor India, meanwhile, recorded its highest-ever domestic sales for August.

In the two-wheeler segment, TVS Motor Company reported an 18% increase in August sales to 4.34 lakh units. Bajaj Auto's domestic motorcycle sales rose 10% to 2.02 lakh units. At the premium end of the market, Eicher Motors' Royal Enfield recorded 11% sales growth to 1.14 lakh units.

Brokerages see strong demand momentum

Despite the sharp selloff in auto stocks, brokerages said the August sales data reflected continued strength in underlying demand across most segments, with several companies reporting healthy growth in volumes.

According to Emkay Global, the auto sector delivered a strong year-on-year performance in August, with growth momentum continuing across segments and companies. However, the brokerage noted that some moderation was visible on a month-on-month (MoM) basis, with Maruti Suzuki, Hyundai Motor, M&M and TVS Motor reporting a decline in volumes compared with the previous month.

Motilal Oswal Financial Services also said that retail demand trends during August remained encouragingly strong across segments, with the exception of tractors, where growth rates moderated as the base caught up. Consequently, August wholesales remained strong across passenger vehicles (PVs), commercial vehicles (CVs) and two-wheelers, all of which reported healthy double-digit growth. Tractor growth momentum, however, slowed to high single digits, it said.

The domestic brokerage attributed the strength in wholesales to steady retail sales, lean inventory levels and easing supply constraints. Within the passenger vehicle segment, Tata Motors PV and M&M outperformed their peers. Maruti Suzuki and Hyundai Motors relatively underperformed, although both still recorded growth during August.

Bajaj Auto emerged as the outperformer in the two-wheeler segment, surpassing Motilal Oswal's expectations with a strong 28.3% YoY increase in wholesales. Meanwhile, the three listed CV OEMs recorded aggregate dispatch growth of 43% YoY. Tata Motors CV continued to outperform its peers in the commercial vehicle segment and exceeded the brokerage's expectations.

Motilal Oswal Financial Services (MOFSL) said Royal Enfield underperformed its peers, reporting 11% YoY growth in volumes to 126.5K units, which was in line with its expectations. Hero MotoCorp's volumes, meanwhile, grew 3% YoY, also in line with expectations, supported by 4.5% growth in its domestic business.

"Overall, given the sustained demand momentum and cooling input cost pressure, we expect renewed investor interest for the sector in the coming quarters," Motilal Oswal said.

The brokerage named Maruti Suzuki, TVS Motors and M&M as its top picks among OEMs. Within auto ancillaries, its preferred picks are Motherson Sumi Wiring India, Samvardhana Motherson International and Endurance.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.