ICRA Forecasts 6-9% Growth in Domestic Market

The Passenger Vehicle (PV) industry will achieve a sales figure of 4.2 million units in the ongoing financial year

March 8, 2024

Despite strong retail sales, dealer inventories remain high, signalling a potential slow growth next year

Retail sales during the recent festive season grew by 6% year-on-year

The utility vehicle (UV) segment is expanding, driven by changing customer preferences and numerous product launches

Rising popularity of alternative fuels like compressed natural gas (CNG) and electricity is supported by the introduction of new models.

The domestic passenger vehicle (PV) market is anticipated to experience growth ranging from 6 to 9% in the ongoing financial year compared to the previous fiscal year, as per ICRA, a ratings firm. In absolute terms, the PV industry is expected to achieve a sales figure of 4.2 million units in the current fiscal year. Despite robust retail sales, the report highlights that dealer inventories remain elevated, and the growth rate is projected to decrease in the upcoming financial year.

During the recently concluded festive season, retail sales saw a year-on-year increase of 6%, according to ICRA. Inventory levels in the industry persisted at a high of 50 to 55 days at the end of January 2024. The UV segment continued to expand, driven by changing customer preferences and a series of product launches. Conversely, the report notes subdued demand in the entry car segment. Adopting alternative fuels such as CNG and electricity is steadily rising, facilitated by the introduction of new models.

The report also indicates that the capital expenditure outlay for original equipment manufacturers (OEM) will remain substantial over the next few fiscal years.

Source: Economic Times

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