Automobile sector growth to level off in fiscal 2024

11 Jan 2023 CW Team

Growth across the automobile sector segments will level off next fiscal as the base effect of last fiscal wanes. But it will still be in line with, or above, India’s real projected GDP growth for next fiscal. Commercial vehicle sales are expected to drive past pre-pandemic levels next fiscal along with passenger vehicles, which did so this fiscal, and tractors, which recorded an all-time high in pandemic-impacted fiscal 2021. Two-wheelers will continue to lag as the hike in their total cost of ownership (TCO) has been much sharper than for passenger vehicles.

Between fiscals 2018 and 2023, TCO rose 36% for two wheelers compared with 26% for passenger vehicles. Improving income sentiments, a low base of the past three fiscals and an improvement in supply chains should continue to support the automobile sector’s recovery in this fiscal.

While tractors will continue to build on best ever numbers recorded in fiscal 2021 post a blimp in fiscal 2022, passenger vehicle (PV) sales in fiscal 2023 are expected to surpass pre-pandemic level highs of fiscal 2019.

However, sales of two wheelers and commercial vehicles (CV) could continue to lag pre-pandemic levels. Earlier, the sector saw three fiscals of muted/negative growth due to a general economic slowdown, depressed demand due to a drop in mobility and subdued income sentiments of buyers following the pandemic.

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