The Indian domestic automotive sector is anticipated to experience moderate growth in the fiscal year 2023-2024, driven by steadily rising demand, as per the assessment by the rating agency ICRA.
Over the last couple of years, the industry has been rebounding, benefiting from a resurgence in economic activities and increased mobility. ICRA is projecting a Compound Annual Growth Rate (CAGR) of approximately 6-9% across various automotive segments over the medium to long term.
Underlying factors such as increasing per capita incomes, demographic trends, low vehicle penetration, and a favorable policy environment, including infrastructure development, are expected to contribute to sustained growth in industry demand, according to ICRA.
In FY24, ICRA anticipates year-on-year growth of 6-9% in the passenger vehicle (PV) segment, 4-7% in the two-wheeler segment, and 2-4% in the commercial vehicle (CV) segment.
Shamsher Dewan, Senior Vice President and Group Head – Corporate Ratings at ICRA, remarked, “We expect growth in various segments of the automotive industry to maintain a moderate pace in FY24. The PV segment is expected to continue its upward trajectory due to favorable demand drivers, while the two-wheeler industry is projected to see moderate volume growth from a lower base.”
“Even though demand sentiments in the CV industry remain stable, volume growth is expected to be relatively modest despite a strong foundation. The impact of erratic monsoon patterns on rural demand in various segments remains a factor to watch, while the government’s initiatives in rural infrastructure development and crop procurement are positive,” he added.