Domestic auto volumes expected to grow by 7-9% in FY24Report

By India Today Auto DeskThe robust demand witnessed in FY23 will continue in FY24 with the domestic automobile volumes expected to grow in the range of 7% to 9% in the next fiscal, according to a report by CareEdge Advisory & Research.

The growth momentum in FY24 will be supported by favourable demand sentiments and various government initiatives for rural and urban development.

While the demand drivers will be the passenger vehicle (PV) and commercial vehicle (CV) segments, the two-wheeler and three-wheeler segments will see a gradual increase in sales and cross the pre-pandemic level in FY24.

“The domestic automobile industry’s sales volume is expected to grow by 7-9% during FY24,” said Tanvi Shah, Director, CareEdge Advisory & Research, in a statement.

“However, inflationary pressure and the mandatory implementation of BS6 Phase 2 regulation from April 2024 may lead to steep price hikes across all vehicle segments, potentially affecting demand,” she added.

In February 2023, domestic automobile sales volumes increased by 9.9% year-on-year, driven by rising demand in urban markets, the wedding season and increased semiconductor production and supply.

The growth in sales volume across segments is supported by healthy demand in the urban sector, increasing replacement demand, higher infrastructure spending, a growing demand for utility vehicles in the PV segment, and the government’s vehicle scrappage policy,” CareEdge said.

The research firm said that the domestic demand is expected to improve in March 2023 due to upcoming festivals across India, sustained healthy urban demand, and better inventory stocks.

Additionally, the recent announcement of high infrastructure spending and the development of clean and green fuel vehicles in Budget 2023-24 will drive the growth of the automobile industry, it noted.