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Passenger vehicle volume likely to grow 6-9% in FY23: ICRA

Updated: Jan 19, 2023 10:51:35am
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Passenger vehicle volume likely to growth 6-9% in FY23: ICRA

New Delhi, Jan 19 (KNN) The passenger and commercial vehicle volumes is expected to witness a growth of 6-9 per cent and 7-10 per cent, respectively in the financial year starting April 2023, domestic credit ratings agency ICRA said on Wednesday.

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India’s automotive industry has seen a healthy revival in the current fiscal, aided by a recovery in economic activities and increased mobility, and is expected to grow at high single-digit levels across segments in FY24, the report stated.

As per the rating agency, the two-wheeler and tractors are estimated to grow at 6-9 per cent and 4-6 per cent, in FY23-24.

However, the two-wheeler industry continues to struggle with industry volumes still below the pre-Covid peak levels; even as improved off-take in the recent festive and marriage season has provided optimism, a sustained recovery in demand sentiments is yet to be seen, it said.

Another segment that is witnessing a weak demand, is the entry-level car segment. The weak demand in this section proves that the purchasing power of the consumers at the bottom end of the pyramid has weekend significantly due to reasons like increasing vehicle price, inflation etc.

"We expect growth across automotive industry segments to remain at high single-digit levels in FY2024. While the passenger vehicle, commercial vehicle, and tractor segment volumes would continue to trend upwards, aided by favourable demand drivers, the two-wheeler industry is also expected to record moderate growth in volumes aided by a low base," said Shamsher Dewan, Senior Vice President at Icra.

The Union Budget 2023-24 is expected to include enhanced budgetary outlays towards rural employment under MGNREGA, rural infrastructure development, enhancement of irrigation facilities, crop insurance scheme, as well as an increase in targets for agricultural credit, he said.

With measures to help rural communities expected to be at the heart of its policies, the budget is expected to aid in boosting the rural-led demand across segments, Dewan added.

The electric Vehicle sector is showing a significant growth irrespective of the two-wheelers accounting for approximately 85-90 per cent of the total EV sales.

Icra has a forecast of a CAGR of around 6-9 per cent across automotive segments over the medium-to-long term. Supporting underlying factors such as rising per capita incomes, demographic profile, low vehicle penetration, favourable policy environment including infrastructure development etc are expected to help grow the industry demand at a steady pace, the ratings agency said.  (KNN Bureau)

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