Mumbai: The Indian automobile industry is anticipated to undergo a consolidation phase across all segments in the short term; however, the long-term growth outlook remains promising for certain key players, as highlighted in a recent report by Axis Securities.
Despite facing short-term obstacles, the sector continues to show resilience, with particular segments experiencing positive trends.
In the commercial vehicle (CV) sector, domestic shipments recorded a 3 percent year-on-year (YoY) decline and a 1 percent month-on-month (MoM) decrease in February 2025.
The market encountered challenges due to a high base effect and moderate replacement demand within the medium and heavy commercial vehicle (MHCV) truck segment.
Analysts project a slight single-digit decline in CV sales for FY25E, as fleet operators exercise caution regarding capacity expansion amid economic uncertainties.
Conversely, the tractor sector is demonstrating strong growth, with domestic sales increasing by 27 percent YoY in February, despite a 2 percent MoM drop.
This growth is primarily driven by robust demand from the agricultural sector, ongoing rabi sowing activities, improved reservoir water levels, and a favorable base effect. Given these encouraging factors, the tractor industry is expected to maintain its upward momentum in the upcoming months.
The passenger vehicle (PV) segment experienced a modest 2 percent YoY growth in February, fueled by strong performances from leading manufacturers.
The two-wheeler (2W) market has shown varied outcomes, with domestic sales remaining marginally positive as major companies experienced differing results across various sub-segments.
In the future, the Indian automotive sector is anticipated to gain from multiple factors, such as a resurgence in rural demand, the introduction of new models, and government tax relief initiatives designed to enhance consumption among the middle class.
Furthermore, the introduction of OBD 2 Phase B regulations starting in April 2025 is likely to impact industry dynamics, prompting manufacturers to keep a close watch on regulatory changes and consumer trends.
