Q2FY19 Preview: Speed bumps ahead for the auto sector

Most of the auto stocks over the past month has corrected significantly and is off their peak valuations

Second quarter of the financial year 2018-19 (Q2FY19) has been a roller coaster ride for most of the auto companies.  Several macro headwinds like rising fuel prices, increasing finance cost and hike in insurance premium have acted as speed breakers. However, while the speed of growth has definitely slowed down over last two months especially in the passenger vehicle (PV) segment (-0.7% YoY), high base effect, too, has had an impact on the volume.

Two-wheelers (2W) have been a consistent performer (+8.3% YoY), thanks to the robust demand from rural areas and high discounts offered by the original equipment manufacturers