Report predicts two-wheeler industry will grow by 8%, while tractor sales are expected to rise by 4% annually.
The two-wheeler industry is set to grow by 8% YoY, driven by strong rural demand, while the tractor sector is expected to rise by 4%, according to a report by Nuvama. Despite growth in these areas, challenges persist for passenger and commercial vehicles due to high base effects.
According to a report by Nuvama, a wealth and investment firm, the two-wheeler (2W) industry is projected to grow by 8% year-on-year (YoY), while the tractor industry is expected to see a more modest growth of 4% in the domestic market. This growth in the 2W sector is driven by strong rural demand and steady urban sales, boosted by a favorable monsoon, which has improved rural sentiment and contributed to increased sales. Dealers are also building up inventory in anticipation of the festive season, leading to higher wholesale volumes compared to retail sales.
The positive outlook for the tractor industry is attributed to improved farmer sentiments, supported by normal monsoon conditions and favorable trade terms, with output inflation outpacing input inflation.
On the other hand, the Passenger Vehicle (PV) segment is likely to see a slight decline in sales, around 3% YoY. This is due to the high base effect from the early festive season last year. Similarly, the Commercial Vehicle (CV) segment is expected to contract by approximately 4% due to a high base effect in the cargo vehicle category, despite positive indicators like increased e-way bill generation and better freight availability for transporters.
Overall, the report indicates a mixed outlook for the automotive industry in August 2024, with growth in the 2W and tractor segments, but challenges in the PV and CV segments. Among 2W original equipment manufacturers (OEMs), mass-market players are expected to perform well.
In the broader automobile market in India, two-wheelers and passenger cars account for 75.3% and 17.6% of market share, respectively. While small and mid-sized cars dominate passenger car sales, SUV sales have seen significant growth in recent years.
India's automotive exports for 2023-24 reached 4.5 million vehicles, with two-wheelers making up 76.8% of the total exports. Passenger vehicle exports also grew by 13.8%, from 662,891 units to 672,105 units during this period.
India aims to double the size of its auto industry to Rs 15 lakh crore by the end of 2024.
