Bajaj Auto, Hero MotoCorp, Maruti: Why auto stocks are falling today

Shares of major auto companies, including Bajaj Auto, Hero MotoCorp, and Eicher Motors, tumbled in early trade on Thursday, following Bajaj Auto’s release of its Q2FY25 financial results. The two-wheeler giant’s weaker-than-expected sales outlook for the crucial festive season has rattled the market, dragging down the broader auto sector.
By 10:39 am, Bajaj Auto shares had plunged 10.39% to Rs 10,410.45, marking their steepest decline since March 2020. The company’s disappointing sales projections for the upcoming festive period triggered a wave of concern among investors, casting a shadow over other auto stocks as well.
In an analyst call on Wednesday, Bajaj Auto’s Executive Director, Rakesh Sharma, revealed that motorcycle sales for the October-November festive season are expected to rise by only 1%-2%, far below the industry’s expectations of 5%-6% growth.
The cautious outlook not only affected Bajaj Auto’s stock but also weighed on shares of its competitors. Hero MotoCorp saw its shares fall 3.61% to Rs 5,202.40, while Eicher Motors, the maker of Royal Enfield motorcycles, was down 1.52% at Rs 4,606.75.
Carmakers weren’t spared either, with shares of Maruti Suzuki India dropping 2.01% to Rs 12,125, and Mahindra & Mahindra (M&M) declining 2.49% to Rs 2,989.15. The ripple effect across the auto sector reflects broader concerns about a potential slowdown in consumer demand during the festive season, typically a time of strong sales for automakers.
Rising inflation, particularly food prices, has caused many consumers to tighten their budgets, leading to weaker-than-expected demand for big-ticket purchases like motorcycles and cars. The shift in consumer behaviour ahead of the festive season could contribute to the auto sector’s underperformance in the market.
Despite Bajaj Auto reporting solid profit growth and meeting margin expectations, analysts noted that the stock had been trading at high valuations, with limited room for upside. The company’s cautious festive season outlook has added to the market’s concern, prompting a sell-off in both two-wheeler and four-wheeler stocks.
As the first major two-wheeler maker to release its Q2 results, Bajaj Auto’s projections have set a cautious tone for the broader auto industry. They signal that automakers may face a challenging period ahead as they navigate rising costs and subdued consumer sentiment.