Auto stocks: Rising cost of ownership to impact volumes and margins

While firms have increased prices, it will be difficult to pass on the entire cost burden as this might impact volumes in the festive season

Led by two-wheeler stocks that have lost up to 5.3 per cent, the BSE Auto Index was among the highest sectoral losers, shedding 2.3 per cent in trade on Friday. Including Friday, the index has dropped over 20 per cent since the start of the year as compared to gains of 6 per cent for the benchmark Sensex. 

There are multiple headwinds plaguing firms in this space. The biggest concern for the auto sector is the decline in volumes, on the back of higher product prices and running costs. Joseph George and Suraj Chheda of IIFL indicated in a report earlier