India’s passenger vehicle sales are expected to grow in the range of 3-5% in the ongoing financial year, according to Shailesh Chandra, president of the Society of Indian Automobile Manufacturers (SIAM).
The projected 3-5% growth is in the hope that there are no major alarms as far as the macro-economic indicators are concerned, says Chandra.
SIAM is hopeful that the festive season will drive sales on the back of new car launches.
Passenger vehicle wholesales grew just 0.5% to 20.81 lakh units in the first six months of 2024-25. Sales of cars and SUVs contracted 1.8% in the second quarter of the ongoing fiscal, dragged down by de-growth in sales of hatchbacks and sedans.
Chandra is optimistic about growth in the second half of the fiscal, saying it will offset the flattish growth in H1.
When asked why electric vehicle sales have de-grown faster than the overall industry, Chandra says the larger industry has been under pressure and new technology such as EVs faces a greater challenge when the industry is under pressure. “It has also been impacted by the 10-15% market which is the fleet segment where subsidy has gone away. That is a source of stress. In a few states, road tax benefits on EVs have ended. Those have been the challenges,” he says.
Lack of charging infrastructure is the biggest bottleneck to the adoption of electric vehicles, says Chandra, calling it a “chicken and egg” situation.
The focus now is on overcoming barriers such as charging infrastructure, says Chandra. “The government has allocated funds to set up 22,000 fast chargers for four-wheelers under the PM E-Drive scheme. That is going to help. A lot of new launches have come so customers have options of different brands, body styles that excite the market. EV prices have come down to a level where they are matching ICE vehicles with automatic transmission. The driving range is also increasing. Given that this is a technology of the future, short-term hiccups are not really too much to bother about,” he explains.
Price reduction in EVs has happened primarily because of lower battery costs which have come down by over 50% in the last two years.
Cheaper battery cells, increasing localisation and growing scale will further bring down EV prices, says Chandra.
Commercial vehicles de-grow 11% year-on-year to 2.21 lakh units in Q2 FY25. While passenger and commercial vehicles sales declined in Q2, two and three-wheelers continued to post strong growth of 12.6% and 6.6% respectively.
“Heavy rainfall in key states and almost the entire ‘Shradh’ period falling in the month of September, did impact the sales numbers of some of the segments. With the rains easing and continued infrastructure spending, and the arrival of the festive season boosting consumption, we anticipate healthy demand in the next quarter,” says Chandra.
