The 2W industry is expected to grow strong at approximately 8% YoY. This marks a healthy turnaround for the sector. The tractor industry would witness a more subdued growth of about 4% YoY in the domestic market, according to a recent report by leading wealth and investment firm Nuvama.
It is rural demand that is leading this anticipated growth in the 2W market. The numbers have seen rural demand far outpacing the urban numbers, thanks to a favorable monsoon. Sentiment has improved, leading to the sale of more units. Even urban sales are holding on their own and supplementing growth. Adding to this, more units are expected to be wholesaled than the retail sales numbers. Tractor dealers are also carrying an inventory build-up in anticipation that the festive season will help boost sales.
Regarding the agricultural sector, better sentiment among farmers supplements the tractor industry’s positive outlook. One of the major reasons responsible for it has been a normal monsoon. Secondly, terms of trade also favor growth in the sector. To be more specific, output inflation significantly exceeds input inflation, further uplifting the spirits of the tractor industry.
It also emphasizes some of the concerns in the other automobile segments. The PV segment is going to record a marginal decline in sales; however, it is expected. The projected decline is by about 3 percent YoY for the domestic market. This predicted decline is due to the high base effect of the early onset of the festive season last year. The early festival season gave a record of very high sales, which will now create a challenging set benchmark.
Similarly, the commercial vehicles industry would marginally contract in annual growth. The projected decline is around 4 percent in the domestic market. This is mainly due to a high base of cargo vehicles. There are, however, some signs of positivity in the sector. Higher e-way bill generation indicates better freight availability for transporters, which may partly offset the decline.
In all, the report envisions a mixed outlook for the automotive industry in August 2024. Growth is seen in the 2W and tractor segments. On the other end, the PV and CV segments are likely to grapple with challenges in their ways. This mixed performance reflects the diverse dynamics influencing different segments of the automotive market.
“Among two-wheeler OEMs, we believe mass-market players to perform relatively better. In two-wheelers and passenger cars accounting for a major share of the Indian automotive market, it is the mass-market players that have a 75.3 percent share. At the same time, passenger cars form 17.6 percent of the pie. In passenger cars, the greatest sellers are small- and mid-sized cars. However, SUV sales have gained considerable momentum of late.”.
India’s automobile exports for FY 2023-24 in the aggregate stood at 45,00,492 vehicles. Of these, 76.8% constituted two-wheelers. Passenger vehicle exports exhibited a sturdy trend, with total dispatches having risen from 6,62,891 units to 6,72,105 units. It shows a growth of 13.8%.
Going forward, India has set an ambitious target for doubling the size of the auto industry. It will aim to achieve the size of the total industry at Rs 15 lakh crore by the end of 2024. This will showcase the commitment that the country has towards expanding and strengthening the automotive sector.
In a nutshell, while the two-wheeler and tractor industries have bright prospects, the problems of the Passenger Vehicles and Commercial Vehicles sectors are not few. The trend mix follows different segments. Anyway, so goes the world it seems of the automobile market. Emphasis on an increase in the auto industry in India underlines its strategic role in the country’s economic development.
ANI
