Synopsis
- In line with CareEdge Ratings’ expectation of volume growth of around 7-9% in FY241, the PV industry volumes
grew by 7.4% in FY24. This moderation in y-o-y volume growth in FY24 was due to the levelling off of pent-
up demand amid a hike in vehicle prices, high base effect of FY23 and the high-interest rate environment.
Strong order book in FY24, robust demand for new model launches and increasing demand in the sports utility
vehicle (SUV) segment kept the sales momentum rolling.
- The PV industry is expected to exhibit moderate volume growth of around 3-5% in FY25 on account of a high-
base effect of FY24, shrinking order book and expectation of persistently subdued demand for entry-level
variants in FY25. The industry is however poised to sustain its sales momentum, bolstered by the strong
demand for new model launches, continued demand momentum in Electric Vehicles (EVs) and SUVs coupled
with expectation of interest rate cuts in the second half of FY25.
- After recording robust growth of 90% in FY24, with an improving penetration rate, electric car sales in the PV
segment are likely to clock volume of around 1.3-1.5 lakh for FY25.
From Recovery to Stabilization
In FY22 and FY23, the PV industry experienced substantial year-on-year volume growth due to pent-up demand
post-Covid recovery and new product introductions. UVs played a significant role, with volumes increasing by 41.0%
in FY22 and 33.2% in FY23. The industry benefitted from lower interest rates and an increased desire for personal
mobility in the wake of the pandemic.
However, during FY24, in line with CareEdge Ratings’ expectation, the PV Industry recorded moderate volume
growth of 7.4%. Factors contributing to this included the levelling off of pent-up demand, higher vehicle prices,
and the high base effect of FY23. Despite these challenges, a strong order book in FY24, new model launches, and
increasing SUV demand kept the sales momentum rolling. While the passenger cars and vans segment volumes
de-grew by 7.2% in FY24 on account of pressure on demand for entry-level variants due to high-interest rates, an
inflationary environment and increased input costs given the mandatory safety features, and BS-VI emission
standards which translated to higher vehicle prices, the SUV segment continued its dominance, with volumes
surging by 22.4% due to strong demand and a robust order book.
FY25 Outlook: PV Volumes to Moderate Amid High Base and Shifting Consumer Preferences
The PV industry is expected to witness moderate volume growth of around 3-5% in FY25 on account of a high-
base effect of FY24, shrinking orderbook and expectation of persistently subdued demand for entry-level variants.
The industry is however poised to sustain its sales momentum, bolstered by the strong demand for new model
launches and SUVs coupled with 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. 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.
1 Passenger Vehicles to grow at 7-9% After a Stronger FY23 dated July 12, 2023
Chart 1: Trend in the PV Industry’s Sales Volume
UVs: Racing Ahead of Demand
UVs, which contributed 10-15% of total passenger vehicle sales volumes until FY12, 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. For the past decade, the UV segment has consistently
outperformed the PV industry growth rate. In FY24, for the first time UV sales volume stood higher than Passenger
cars and vans. Currently, UVs account for over 55% of all new PV sales and its share in overall PV sales is expected
to further rise over the medium term.
Chart 2: Trend in Passenger Cars & Vans and UVs Sales Volume
EVs: Electrifying Forward
Electric car sales continue to improve over the last five years. For FY24, electric car retail sales recorded y-o-y
growth of 90% with volumes at 90,432 units. With an improving penetration rate, electric car volumes, in the PV
segment, are likely to clock sales volume of around 1.3-1.5 lakh for FY25.
Chart 3: Trend in Electric Car Sales
CareEdge Ratings’ View
“The PV industry is expected to exhibit moderate volume growth of around 3-5% in FY25 on account of a high-
base effect of FY24, shrinking orderbook and expectation of persistently subdued demand for entry-level variants
in FY25. Strong demand for new model launches and SUVs coupled with the expectation of interest rate cuts in the
second half of FY25 is expected to keep the sales momentum rolling,” said Arti Roy, Associate Director at CareEdge
Ratings.
“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. 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,” said Hardik
Shah, Director at CareEdge Ratings.
Contact
Ranjan Sharma Senior Director Ranjan.Sharma@careedge.in +91 – 22 – 6754 3453
Hardik Shah Director hardik.shah@careedge.in +91 – 22 – 6754 3591
Arti Roy Associate Director arti.roy@careedge.in +91 – 22 – 6754 3657
Madhusudhan Goswami Lead Analyst madhusudhan.g@careedge.in +91 – 80 – 4662 5558
Mradul Mishra Media Relations mradul.mishra@careedge.in +91 – 22 – 6754 3596
CARE Ratings Limited
Corporate Office: 4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai – 400 022
Phone : +91 – 22 – 6754 3456 l CIN: L67190MH1993PLC071691
Locations: Ahmedabad l Andheri-Mumbai l Bengaluru l Chennai l Coimbatore l Hyderabad l Kolkata l New Delhi l Pune