Indian passenger vehicle market likely to see record 20% growth in FY24: Study

Indian passenger vehicle market is expected to register a record 18-20 per cent growth in this financial year, claims a study by credit rating agency CareEdge. PTI has cited the report saying that despite the hike in passenger vehicle prices announced by several automakers including Maruti Suzuki, Tata Motors etc, pent-up demand levels will play a crucial role in the growth of PV sales in this fiscal.

The study also reportedly projected that the positive sales momentum for passenger vehicles will continue in the next financial year as well, where factors like strong order book and improvement in the supply chain will play vital roles.

CareEdge Research Director Tanvi Shah reportedly said that the passenger vehicle segment in India is likely to record a volume growth of around 18-20 per cent in FY2023-2024 as pent-up demand levels off amid the hike in vehicle prices. She further added that the upward trend of 18-20 per cent is likely to persist in FY2025, owing to a string order book, improvement in the supply chain, robust demand for new car launches and increasing demand in the utility vehicle segment.

SUVs and new cars to propel growth

The Indian passenger vehicle market has been witnessing a surge in demand for utility vehicles including both SUVs and MPVs. Besides that new cars have been pushing the growth momentum further across the country. In 2023, several new passenger vehicle models have been launched by various automakers in both the mass-market and luxury segments. Also, these new models were launched in both the internal combustion engine and electric vehicle segments.

The study has stated that electric cars contribute about six per cent to the total EV sales in the country and the sales volumes have grown significantly in the past few years. The study claims that in the coming months as well, this trend will continue. It claims that the utility vehicles and new model launches will further propel growth in the Indian passenger vehicle market. It added that more OEMs have planned to introduce new electric vehicles in the market, suitable for the domestic market that could boost the adoption of EVs propelling overall growth.

The passenger vehicle segment constitutes about 18 per cent of the total domestic sales in India, claims the report. It further stated that passenger vehicle domestic sales have grown 25 per cent year-on-year in the first nine months of FY2024. It also added that the segment's growth trajectory continued for two consecutive financial years with improved vehicle availability and the influx of new and facelifted models from various OEMs.

Small car segment to remain a worry

The small cars in India have been witnessing a dampening demand over the last couple of years. Entry-level hatchbacks, which used to be the growth engine of the Indian passenger vehicle market, have been witnessing a slowdown in sales. The report has projected that small cars will continue to see declining demand in the coming months as well, owing to the high interest rates and economic inflation. However, demand for premium variants is expected to remain healthy, claimed the rating agency.