New Delhi [India], February 4 : India's passenger vehicle (PV) industry is expected to witness low single-digit growth in FY25, with forecasts indicating a modest 1.5 per cent year-on-year (y-o-y) growth due to subdued demand, according to Nomura report.
The two-wheeler (2W) segment, however, could see some relief as weak domestic demand may be offset by stronger export recovery. Meanwhile, the tractor industry, projected to grow at 7 per cent y-o-y, may witness an upside if healthy demand traction continues.
Passenger vehicles saw a boost at the start of the year due to channel filling after strong retail sales and lower inventory levels in December.
However, discounts are expected to rise in the coming months. Among key manufacturers, Mahindra & Mahindra's SUVs and LCVs, along with TVS Motor's scooters, outperformed expectations, while Tata Motors' (TTMT) passenger vehicles underperformed compared to estimates.
The government is providing financial help to farmers through different rural programs and agricultural subsidies. These include schemes that support farming activities, reduce costs for farmers, and improve their income.
Additionally, the government is expected to increase spending on rural development and agriculture. This extra financial support can encourage more farmers to buy tractors, leading to higher demand in the market.
The changes in personal income tax announced in the Union Budget are positive for the automobile sector, but the overall impact may not be very significant.
This is because 60 per cent of the 80 million tax filers in India do not pay any tax. While those under the New Tax Regime will benefit from higher savings, most taxpayers still follow the Old Tax Regime, where they claim deductions, resulting in lower overall savings.
As a result, the impact of tax cuts on vehicle sales may be limited. However, higher-income individuals, who are more likely to see substantial tax savings, may spend more on bigger vehicles like SUVs rather than smaller cars.
This means that the premium segment of the automobile market, particularly SUVs, could see more benefits compared to budget cars.
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