Projected growth of 1-4% in sales of passenger vehicles in FY25, according to ICRA report

Indian Auto Industry Sees Growth in Exports Amid Challenges

The Indian auto industry is finding some respite in the growth of exports, as reported by industry watchers. In July, exports saw a significant 9% year-on-year jump, with Maruti Suzuki and Hyundai Motor India leading the way. This growth underscores the growing importance of overseas markets for Indian automakers.

The best-selling SUV models in India's auto market are proving to be lifelines for manufacturers amid current challenges. Models such as the Suzuki e Vitara, Hyundai Creta, and Mahindra XEV 9e are popular choices, while affordable electric SUVs like the VinFast VF6 and VF7, launched by VinFast with aggressive pricing, are undercutting competitors like Tesla and BYD.

The variety of utility vehicles available in the market has kept customer interest alive, even as small cars and sedans have slowed. For most manufacturers, SUVs are a crucial source of revenue in an otherwise challenging market. Wholesale volumes grew 8.9% sequentially in July, due to carmakers stocking dealerships ahead of Onam and the upcoming festival cycle.

Retail sales showed a sequential rise of 10.4% but were still down 0.8% compared to July the previous year. Despite this, the momentum of SUV sales continues, with these vehicles accounting for 65-66% of overall passenger vehicle sales in India's auto market.

The central government's proposal to remove two of the four Goods and Services Tax (GST) slabs could offer some relief in prices for certain vehicle categories. If this proposal goes ahead, it could provide a boost to demand in the auto industry. The Federation of Automobile Dealers Associations (FADA) reported that inventory levels reached 55 days by the end of July, suggesting that dealerships are well-stocked for the upcoming festive season.

All eyes are now on September 1, when carmakers are set to publish their August sales numbers. The next few months will be crucial for the auto industry, as it balances optimism with caution. Policy shifts may potentially offer further relief in the industry, and the approach of the festive season could determine whether FY25 ends as another year of solid growth or just a pause in the industry's long recovery run.

Projected growth of 1-4% in sales of passenger vehicles in FY25, according to ICRA report