Passenger vehicle volume to rise by 5-7 %, touch new peak in next fiscal: Report
- IBEF
- February 27, 2024
Credit rating agency Crisil foresees a 5-7% growth in passenger vehicle (PV) volumes for the next fiscal year, marking a third consecutive peak, primarily propelled by the SUV segment. The shift in consumer preferences has led to SUVs doubling their market share to approximately 60%, up from 28% pre-pandemic in fiscal 2019. This surge is expected to outpace overall PV volume growth, reaching over 12%, driven by new model launches, including electric variants, and improved semiconductor availability. Crisil acknowledges a potential slowdown in car demand due to rural market weaknesses and reduced affordability at the entry-level. Despite challenges, the SUV segment's higher realizations, stable commodity prices, and prior price hikes have expanded operating margins by 200 basis points to around 11% this fiscal year, with the possibility of reaching 11.5%-12.5% next fiscal year.
While PV exports have slowed to 14% this fiscal year from around 17% in fiscal year 2019, Crisil expects this trend to persist. Despite substantial capex of around US$ 5.3 billion (Rs. 44,000 crore) in fiscal years 2024 and 2025 to meet strong SUV demand, PV makers maintain stable credit profiles, supported by healthy cash accrual and surplus. This ensures minimal reliance on external borrowings and positions the industry well for continued growth and stability.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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