Domestic automobile sales are expected to grow 7-9% in FY24 owing to robust demand supported by various government initiatives for rural and urban development, according to CareEdge ratings. The rating agency says that passenger vehicles and commercial vehicles are expected to drive demand, while two-wheeler and three-wheeler segments will gradually increase sales and cross the pre-pandemic level.
The rating agency, however, cautions against a steep price hike in all vehicle segments, which might potentially affect vehicular demand owing to inflationary pressure and the mandatory implementation of BS-VI emission Phase-II regulation from April 1. Major automobile players such as Maruti Suzuki, Tata Motors, and Hero MotoCorp have already announced a price hike from April 1. While Tata Motors and Hero MotoCorp have raised automobile prices by 5% and 2%, respectively, Maruti Suzuki has not disclosed the percentage of the price hike.
According to the rating agency, in the 11 months of FY23, the overall domestic sales increased by 21% as compared to the same period last year, driven by an increase in sales in the commercial vehicle and passenger vehicle segments. The growth in sales across all automobile segments is attributed to positive urban sentiments, the wedding season, and pre-buying due to the transition towards BS-VI Phase II norms.
In the 11 months of FY23, the two-wheeler segment registered a growth of 17.8% YoY. Of this, the scooter sub-segment grew by 27%, and the motorcycle sub-segment by 15% YoY during the period under review. While the segment witnessed an improvement in the urban consumer market, the demand in the rural market remained muted. The rating agency says that the change in emission norms from April is expected to further boost the demand for the two-wheelers segment.
In the three-wheelers segments during the 11 months of FY23, the sales in passenger carrier and goods carrier sub-segments, surged by 112% YoY and 29% YoY, respectively. In FY24, various financing schemes will drive sales across the segment.
In the passenger vehicle segment, domestic sales surged 29.3% YoY during the period under review supported by the launch of new models, improvement in the supply chain and healthy bookings due to the wedding season. Of this, sales in the utility vehicle sub-segment increased by 38% YoY, whereas passenger cars grew by 22% YoY. The rating agency says in FY24, passenger vehicle sales are expected to increase driven by pre-buying due to regulatory changes.
The commercial vehicle segment, in the nine months of FY23, witnessed an increase in sales by 46% YoY, with strong 64% growth in the medium and heavy commercial vehicle sub-segments. The growth was due to the improvement in freight movement across the country and healthy infrastructure spending by the government. The light-commercial vehicle subsegment grew by 38% YoY in the nine months of FY2023. In FY24, Domestic demand in the CV segment is expected to surge due to the replacement of ageing vehicles.
However, despite robust sales across all segments, automobile exports plunged 14% year-on-year (YoY) during the period under review owing to continued global headwinds and an inflationary environment across various international markets. Of this, two-wheeler exports declined by 16.7% YoY, whereas three-wheelers exports declined by 25% YoY.
During the 11 months of FY23, passenger vehicle exports stood at 14.9% YoY, with the passenger car sub-segment showing an increase in exports by 11% YoY.
Meanwhile, in the nine months of FY23, exports in the commercial vehicle segment declined by 6% YoY due to dwindling global macroeconomic situations.
