Indian auto sector to see moderate growth in FY24, predicts ICRA

The Indian automotive industry has grown from strength to strength in recent times with almost every sector - passenger vehicles, three-wheelers as well as commercial vehicles - registering a relatively strong growth performance. With momentum clearly adding wind to the proverbial sails, ratings agency ICRA has predicted the automotive industry as a whole to witness moderate growth in FY24.

While Covid-19-plagued years were a mammoth challenge for the Indian automotive industry, the recovery in the post-lockdown phase has been quite remarkable. Demand has been extremely strong, aided massively by a recovery in economic activities, resumption of normal mobility and introduction of new and updated models, noted ICRA.

While a semiconductor shortage had threatened to puncture supply chains and production cycles, often even resulting in long wait times, the worst is clearly over with most manufacturers reporting near normal work at their respective facilities. “The passenger vehicle segment reached all-time high volume levels in FY23, aided by preference for personal mobility and stable semiconductor supplies and the demand sentiments are expected to remain healthy in the segment, 6-9 per cent year-on-year (YoY) growth in FY2024," informed a press statement issued by ICRA.

On similar lines, the commercial vehicles' segment is on a high too and ICRA states industry volumes are all set to touch pre-pandemic levels. Growth though may remain at modest levels.

ICRA however puts a special spotlight on the fact that industry volumes in the two-wheeler segment still remains below pre-Covid peak levels. "The impact of an uneven monsoon precipitation on rural demand across segments remains monitorable, even as the government's efforts on rural infrastructure development, crop procurement etc. remain positive," said ICRA Senior Vice President & Group Head - Corporate Ratings Shamsher Dewan said.

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