Indian domestic automobile industry is expected to grow at a rate in the high single digits in the fiscal year 2023-24, according to a report by rating agency ICRA on Thursday, January 19.
According to the report, the demand in the passenger vehicles segment is expected to grow by at 6-9 percent, demand for commercial vehicles by 7-10 percent, for two-wheelers by 6-9 percent and for tractors by 4-6 percent in 2023-24.
This is compared to a projected 21-24 percent growth in demand for passenger vehicles, 18-20 percent for commercial vehicles, 9-12 percent for two wheelers and 0-4 percent for tractors in 2022-23, the report said.
The domestic automotive industry has seen a healthy revival so far in 2022-23 aided by a recovery in economic activities and increased mobility. The demand sentiments for a majority of the automotive segments, namely, passenger vehicles, commercial vehicles, and tractors, have remained healthy, aiding in improved offtake for industry participants, ICRA said.
However, the two-wheeler industry continues to struggle with industry volumes still below the pre-covid peak levels and, even as improved offtake in the recent festive and marriage season has provided optimism, a sustained recovery in demand sentiments is yet to be seen, ICRA said.
A similar trend of relatively weak offtake has been seen for the entry-level car segment, implying that the purchasing power of consumers at the bottom end of the pyramid has been eroded to an extent over the past few years by the significant rise in vehicle prices, a result of price hikes to combat inflationary pressures and meet stringent regulatory requirements and disruptions caused by the pandemic, ICRA added in its statement.