India's auto industry is expected to see moderate volume growth in FY24, but a sustained recovery in demand is still in sight amid concerns over the impact of erratic monsoon on rural demand, rating agency ICRA said on Oct 31. The industry has been on a path of recovery over the past two years, supported by a recovery in economic activity and increased mobility, although the pace of recovery has varied somewhat across automotive sectors, ICRA said in a statement.
The passenger car segment reached an all-time high in FY23, supported by a preference for personal mobility and stable semiconductors, and the segment's demand situation is expected to remain healthy at 6-9 percent year-on-year (y-o-y) growth in 2024, he added.
Similarly, the commercial vehicle industry and overall industry volumes are expected to approach pre-pandemic peaks, although economic growth will remain moderate in FY24 at 2-4 percent y-o-y on a healthy basis. ICRA reported that segment volumes grew strongly in FY23 on a limited basis.
The rating agency added that, unlike these two segments, the two-wheeler industry continued to struggle with industry volumes still below pre-Covid peak levels.
“We expect automotive industry growth to remain moderate in 2024. While passenger-car volumes will continue to grow on the back of favorable demand factors, the two-wheeler industry is also expected to see moderate volume growth due to a low base,” ICRA Director & Group Head - Corporate Valuation Shamsher Dewan said.
While demand sentiment in the commercial vehicle industry is steady, volume growth is expected to remain moderate, he added.
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