Auto firms on a slippery path over sliding demand, higher inventory levels

Higher inventory levels, fall in volume growth and rise in discounts to hamper revenue growth and margins

Even as the broader markets are on an uptrend, gaining over 2.2 per cent over the last one week, the BSE Auto Index has shed over 2 per cent in the same period. After sliding 4 per cent in February, auto volumes are expected to be flat or see a fall in March compared to the year-ago period.

Most brokerages have cut their volumes and earnings growth estimates given that the lack of demand, which started from the festival season in October, has continued resulting in higher inventories. 

Sharp rise in prices due to upfront insurance payments, especially at a time when