The volume growth of the Passenger Vehicles (PV) industry in FY25 is estimated to be moderate on account of a high base effect from FY24, a shrinking order book, and the expectation of persistently subdued demand for entry-level variants in FY25.
According to a CareEdge Rating report, the PV segment is expected to witness moderate volume growth of around 3-5% in FY25 after volumes grew by 7.4% in FY24.
However, the industry is poised to sustain its sales momentum, bolstered by the strong demand for new model launches and SUVs and the expectation of interest rate cuts in the second half of FY25.
“While the market for premium vehicles is predicted to thrive, driven by a surge in demand for luxury and high-end models, entry-level variants are likely to see continued diminished demand due to a downturn in both rural and urban markets,” said Hardik Shah, Director at CareEdge Ratings.
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The rural sector is feeling the pinch as entry-level vehicles are becoming more expensive, whereas urban consumers are increasingly opting for SUVs, reflecting a shift in market preferences, Shah added.
Utility Vehicles (UVs) grew at a CAGR of 15.51% between FY13 and FY24 as consumer preference shifted towards UVs that offered better and innovative designs, new models, technological, functional and safety features.
The UV segment has consistently outperformed the PV industry growth rate for the past decade. In FY24, for the first time, UV sales volume stood higher than Passenger cars and vans, the CareEdge report said.
It added that UVs currently account for over 55% of all new PV sales, and their share in overall PV sales is expected to rise further over the medium term.
Electric Vehicle (EV) sales recorded 90% YoY growth in FY24 with volumes at 90,432 units. Analysts expect EV sales volume to surge to around 1.3 lakh - 1.5 lakh in FY25, led by improving penetration rate.
