The auto sector bled on Thursday, October 1, with Bajaj Auto leading the charge into the red, shedding nearly 7.5% on the NSE. The drop was triggered by a dismal September sales report where domestic two-wheeler volumes fell 12% year-on-year, dragging the total domestic segment down by 9%. Exports, usually the cushion, failed to save the quarter, slipping below the 2.5 lakh units threshold for the first time in four months despite a 32% year-on-year jump. Three-wheeler sales added to the pain, declining 9% from last year.
Mahindra & Mahindra wasn't spared. While overall sales grew 15%—just shy of the 16% expected in a CNBC-TV18 poll—the tractor segment was the culprit. Tractor sales nosedived 21% to 52,100 units, significantly missing the 11% decline analysts had penciled in. The stock traded at ₹2,885, down 2.2%. SUV sales held steady at 14% growth, but it wasn't enough to offset the rural softness.
Escorts Kubota mirrored the tractor sector's malaise. Overall sales dropped 16.7% to 15,214 units, with domestic tractor sales down 16% to 14,911 units. Exports collapsed 35% to just 303 units. The stock, already down 31% year-to-date, slipped another 3% to ₹2,634.20.
There was a bright spot, though. Force Motors posted its second consecutive month of 50%+ growth, with total September sales hitting 4,101 units—the highest since March. Domestic sales surged 62%. Yet, the stock didn't celebrate; it opened higher but faded to a 0.8% loss at ₹16,910, reflecting broader market skepticism despite the strong numbers.
The market is now watching for Q3 earnings, where margins will be the key tell. If rural demand doesn't pick up in the festive season, the pressure on auto valuations will only intensify. For now, the street is pricing in a tough winter for the sector.