Light vehicle (LV) wholesales in India remained weak in February, inching up by just 1% year-on-year to 323,000 units.

According to LMC Automotive, passenger Vehicle (PV) sales fell by 2% YoY to 257,000 units while demand for light commercial vehicles (LCVs) with GVW of up to 6 tons surged by 12% YoY to 67,000 units.

Analysts said consumers and businesses were taking a wait-and-see approach ahead of the general elections in April/May 2019. A slowing economy, a weak rupee, and tight credit conditions (even after a recent interest rate cut) were also dampening sales.

PV retail sales in particular remained sluggish. As a result, dealer inventory doubled to 50-60 days in February, from 30-35 days in January, according to the Federation of Automobile Dealers Association (FADA). Thirty days is seen as an acceptable inventory level in India.

Discounting in the PV sector also continued between January and March, as OEMs and dealers aimed to liquidate stock before the end of the Indian financial year on 31 March.

On a seasonally adjusted annualised rate (SAAR) basis, LV sales fell to 3.77 mn units in February, compared to 3.79 mn units in January and 3.95 mn units in December.

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LV sales between January and February were flat at 665,000 units. PV sales decelerated by 3% YoY to 521,000 units, offsetting an 11% YoY rise, on sales of 134,000 units in the LCV segment.

The selling rate averaged 3.78m units in the first two months of this year.

In addition, preliminary data for March indicated the top PV makers sold about 248,000 units, down by 1% YoY.

Sales were, however, expected to improve in the second half of 2019, once political stability returns after the end of the general elections.

LV output in February dropped by 4% YoY to 387,000 units. PV production fell by a sharp 8% YoY to 316,000 units, as market leader Suzuki Group cut output by 11% YoY.

LMC Automotive has also forecast weak PV volume for the group in March, with an estimated 19% YoY decline to 127,000 units, as it begins another round of inventory correction to compensate for consistently weak retail demand since August 2018.

By the end of February, India's total LV output had slipped by 1% YoY to 807,000 units, divided between 662,000 PVs (off 4% YoY) and 145,000 LCVs (13% gain YoY).

For the market as a whole, analysts believe PV production is unlikely to improve before mid-year, which will continue to weigh on overall LV volumes through to the first half of 2019.

The ongoing slowdown in the Indian market through the first half of 2019, as well as upcoming challenges, such as stricter safety and emissions regulations, were already factored into the forecast so outlook was unchanged essentially.

LV sales in 2019 are forecast to exceed 4m for the first time in Indian history and reach 4.12m units (+3% YoY).