Automobile Industry is expected to have moderate growth, Automobile Industry is on the path of comeback in the last two years.

Indian Credit Rating Agency ikra ratings has estimated moderate growth in the automobile industry in the current financial year 2023-24. ICRA said that while the passenger vehicle segment is expected to register high sales, the two-wheeler industry is also expected to register moderate growth in sales with the help of a low base.

The rating agency said that the passenger vehicle segment recorded an all-time high sales in the last financial year 2022-23.

ICRA said in a statement that due to improvement in economic activities and increased movement of people, the automobile industry is on the path of comeback in the last two years. However, the pace of recovery across various automotive segments has been somewhat mixed. The rating agency said that in the last financial year 2022-23, all-time high sales were recorded in the passenger vehicle segment. Preference for private vehicles and stable semiconductor supply played an important role behind this. Amidst expectations of strong demand in this segment in the current financial year also, the growth on annual basis is expected to be six to nine percent.

ICRA said growth in the passenger vehicle segment will be supported by the following factors:

ICRA said growth in the passenger vehicle segment will be supported by the following factors:

  • Improvement in economic growth: India’s economy is estimated to grow at the rate of 7.5% in the current financial year. Improvement in economic growth will increase consumer spending, which will increase demand for passenger vehicles.

  • Introduction of new products and features: Vehicle manufacturers are introducing new products and features, which are attracting consumers.

  • Increase in availability of loans: Banks and financial institutions have increased the availability of loans for passenger vehicles, making purchase easier.

ICRA said growth in the two-wheeler segment will be supported by the following factors

ICRA said growth in the two-wheeler segment will be supported by the following factors:

  • Reforms in the agricultural sector: Reforms in India’s agricultural sector will increase income in rural areas, which will increase the demand for two-wheelers.

  • Introduction of new products and features: Two-wheeler manufacturers are introducing new products and features, which are attracting consumers.

  • Increase in availability of loans: Banks and financial institutions have increased the availability of loans for two-wheelers, making purchase easier.

  • ICRA said that in the current financial year, a growth of 12 to 14% is expected in the passenger vehicle segment and 10 to 12% growth in the two-wheeler segment.

Commercial vehicle industry total sales expected to reach pre-pandemic highest level

The rating agency said that in the last financial year 2022-23, all-time high sales were recorded in the passenger vehicle segment. Preference for private vehicles and stable semiconductor supply played an important role behind this. Amidst expectations of strong demand in this segment in the current financial year also, the growth on annual basis is expected to be six to nine percent. Similarly, total sales of the commercial vehicle industry are expected to reach pre-pandemic highs. Even though the growth on annual basis is expected to be at a modest level of two to four percent in the financial year 2023-24.

Growth in automotive industry sectors to remain moderate in FY 2024

Shamsher Dewan, Senior Vice President and Group Head (Corporate Ratings), ICRA Ratings, said, “We expect growth in the automotive industry sectors to remain moderate in FY 2024. While the number of passenger vehicles will continue to grow due to favorable demand, the two-wheeler industry is also expected to register moderate growth in sales on the back of a low base. “Rural demand is uneven across different regions,” Diwan said. The effect of monsoon rains remains a matter of concern. Even though the government’s efforts on rural infrastructure development, crop procurement etc. remain positive.