EV sales in India at boost: E-passenger vehicles to rise by 6-9% in FY24

The Indian automobile sector is experiencing growth as economic activities recovered and the mobility sector expanded during the last two years, according to a recent assessment by credit rating agency ICRA. The passenger vehicle market saw record-breaking sales in FY23, and 6-9% YoY growth is anticipated in FY24.

In contrast, the commercial vehicle sector had strong growth in FY23 and is predicted to rise by a moderate 2-4% YoY in FY24. The two-wheeler business is still having trouble, meanwhile, since volumes are still below their pre-COVID high levels.

Regarding the prognosis for the automotive sector, Shamsher Dewan, Senior Vice President & Group Head, of Corporate Ratings, ICRA, stated: "We estimate growth across the automotive industry categories to remain at modest levels in FY24... Even while the government's efforts to enhance rural infrastructure and purchase crops, among other things, continue to be beneficial, the effect of unequal monsoon precipitation on rural demand across segments may still be observed.”

For the medium to long term, ICRA projects a CAGR (compound annual growth rate) of 6-9% for the automotive categories. Steady industry growth is anticipated due to factors including low vehicle penetration, demographics, growing per capita incomes, and supportive governmental environments. Over the past two years, the

electric vehicle (EV)

Thanks to substantial subsidies, the

electric two-wheeler

OEMs are anticipated to make large investments in the creation of EV platforms and expanding production capabilities as the electrification transition progresses. Over the short to medium term, this investment is anticipated to moderate the industry's return indications. In spite of this, OEMs' continued efforts to improve distribution networks and their competitive production skills are encouraging for export prospects.

However, growth is anticipated to be driven mostly by local sector volumes in the near future, with export prospects continuing weak owing to inflationary pressures and a lack of currency availability in important markets.