Indian automobile industry saw robust 19% growth, tops Rs 10 lakh crore in FY24

Indian automobile industry: With newer players foraying in the Indian automobile industry and an expectation of improvement in sales, the sector saw impressive growth, expanding by 19 per cent to Rs 10.22 lakh crore in FY24, primarily driven by the sharp increase in utility and sports utility vehicle (SUV) segments, as per a recent report by management consulting firm Primus Partners.

The report highlighted a 10 per cent increase in overall industry volume for the year. Notably, the UV and SUV segments experienced a substantial 23 per cent rise in volume and a 16 per cent increase in prices, culminating in a 39 per cet growth in overall value for the last fiscal year. 

This uptick in average prices was attributed to several factors, including a general rise in prices, a shift towards higher-segment vehicles, the growing popularity of hybrid and automatic models, sunroofs, and electric vehicles (EVs).

"Indian consumers are increasingly opting for higher-end, more expensive models across various segments, leading to a rise in the average price of vehicles," the report stated.

Anurag Singh, Managing Director of Primus Partners, commented, "India is at the forefront of the global automobile industry, moving away from lower-priced products and adding more value with feature-rich, higher-priced vehicles. This transformation is driven by consumer preferences and strong economic fundamentals, with the UV and SUV segments becoming the preferred choice for many Indian consumers."

In contrast, the passenger vehicle (PV) segment saw a 9 per cent decline in volume due to a slight increase in prices, resulting in a 4 per cent drop in value. Meanwhile, the two-wheeler segment recorded a 10 per cent increase in volume and a 13 per cent rise in value. The three-wheeler segment grew by 16 per cent in volume and 24 per cent in value, and the commercial vehicle segment saw a 3 per cent rise in volume and a 7 per cent  increase in value.

Even as India is the third-largest in terms of vehicle registrations, behind China and the US, India lags behind countries like Japan and Germany in value terms. Additionally, the average price of vehicles in India remains lower than in many advanced countries. However, the value of the Indian automobile industry is growing at a faster rate than its volume.

India also stands out as the top producer of two-wheelers globally, with over 20 million units produced last year. The two-wheeler segment dominates the market in volume with a 76 per cent  share, while its value share is 18 per cent.
The report also noted that the global automobile industry had a strong year in 2023-24, with lingering pent-up demand from the pandemic period and easing supply chain constraints contributing to the positive outlook.

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( With PTI inputs)