Waning demand set to hit breakneck rally in auto stocks
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A sizzling rally in India’s auto shares is reversing as a build up of unsold vehicles and growing discounts by carmakers pressure profit margins. India’s NSE Nifty Auto Index is down 4.1% in August, more than double the decline in the Nifty 50 Index. Bellwether Maruti Suzuki India Ltd. has slid 6% so far in the month, on track for its worst monthly performance since December 2022. Passenger vehicle inventories have surged to historic highs of up to 72 days, the Federation of Automobile Dealers Association said last month. Waiting period for some models, once as long as 12 months a year ago, have nearly vanished, according to MRG Capital. Increased competition among carmakers has also led to price cuts. These factors have raised concerns about whether local carmakers can sustain the robust sales seen after the pandemic. Bloomberg “After such a run up there is risk that these companies will see correction,” said Manu Rishi Guptha, a portfol...