The passenger vehicle (PV) industry is poised for moderate growth of 3-5% in FY25, according to the latest report by CareEdge Ratings. This projected growth follows a robust 7.4% increase in FY24, influenced by a high base effect from FY23 and a challenging macroeconomic environment.
The FY24 growth was driven by a strong order book, ongoing demand for new model launches, and a surge in the sports utility vehicle (SUV) segment. However, the industry faced a slowdown in volume growth due to the levelling off of pent-up demand, higher vehicle prices, and a high-interest rate environment.
Looking ahead, CareEdge Ratings forecasts a continued but moderated growth trajectory for the PV industry in FY25. The forecasted 3-5% growth is attributed to the high base effect of FY24, a shrinking order book, and persistently subdued demand for entry-level variants. Despite these challenges, the industry is expected to maintain momentum due to strong demand for new model launches and the burgeoning Electric Vehicle (EV) segment, alongside anticipated interest rate cuts in the latter half of FY25.
Electric vehicle sales have shown remarkable growth, with a 90% increase in FY24, bringing volumes to approximately 90,432 units. For FY25, electric car volumes are expected to range between 1.3 to 1.5 lakh units, reflecting an ongoing shift towards greener automotive options.
The SUV segment continues to outpace other vehicle categories, accounting for over 55% of new PV sales. This trend is expected to persist as consumer preferences shift towards premium and high-end models, although the entry-level vehicle market faces declining demand. The rural market is particularly affected by rising vehicle costs, while urban consumers increasingly prefer SUVs.
CareEdge Ratings highlights that while the premium vehicle market is set to thrive, the entry-level segment is likely to remain under pressure. The industry’s performance in FY25 will hinge on the balance between these evolving consumer preferences and the broader economic conditions.
