The Indian automotive industry is set to experience moderate volume growth in the fiscal year 2024, according to a statement by ICRA, a leading rating agency. While the sector has been on a recovery trajectory over the past two years, buoyed by a resurgence in economic activity and increased mobility, the pace of this recovery has shown some variation across different automotive segments.

Passenger Car Segment Thriving

The passenger car segment stood out, reaching an all-time high in fiscal year 2023. This remarkable performance was attributed to a growing preference for personal mobility, as well as a stable supply of semiconductors. Encouragingly, the passenger car segment is expected to maintain its robust demand, with an anticipated 6-9 percent year-on-year (y-o-y) growth in 2024.

Commercial Vehicles and Industry Recovery

Similarly, the commercial vehicle industry is poised to make strides, with overall industry volumes approaching pre-pandemic levels. However, the pace of economic growth is projected to remain moderate in fiscal year 2024, with an estimated 2-4 percent y-o-y growth on a healthy basis. ICRA reported that segment volumes showed strong growth in the fiscal year 2023, albeit on a limited scale.

Two-Wheeler Sector Outlook

In contrast, the two-wheeler industry is expected to witness more modest volume growth due to a relatively lower starting point. This segment, which forms a significant part of the Indian automotive landscape, faces specific challenges. However, the sector's resilience and potential for growth remain undoubted, particularly in the context of evolving consumer preferences.

ICRA's Perspective

Shamsher Dewan, Director & Group Head - Corporate Valuation at ICRA, shared insights on the industry's outlook, stating, "We expect automotive industry growth to remain moderate in 2024. While passenger-car volumes will continue to grow on the back of favorable demand factors, the two-wheeler industry is also expected to see moderate volume growth due to a low base."