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MRF Q1 FY26: Revenue Up, Profits Down on Margin Pressures
Automobile News, Autos, Equities, Markets - February 21, 2025

Auto industry anticipates boost in demand by wedding season and recovery of infra projects

Indian automobile industry anticipates boost in demand by wedding season and recovery of infra projects

 

The Indian automobile industry is looking forward to the upcoming marriage season and also recovery of public infrastructure projects. The auto industry believes that it will lead to growth in sales of the vehicles, particularly affordable cars and two-wheelers. 

 

Challenges faced by Automobile industry

Following the festive season, the automakers in India faced issues in sales growth. It is also due to gradual removal of discounts. In recent times, the automakers are paying attention to two crucial factors which are overall demand trends and surge in price levels in the market. It will aid them in anticipating the future outlook of the auto industry and company as well. 

 

Higher rural demand

In terms of rural and urban demand, the demand for vehicles by rural region was higher in the range of 200 to 300 bps compared to the urban growth in the third quarter of FY25. This demand trend in rural areas highlights that people living in rural regions are showcasing higher interest in buying vehicles against the people living in urban regions. Despite strong growth from rural areas, the auto industry required a stronger boost in order to have complete revival of demand in the industry.

 

Factors contributing to revival of demand

As per the past trends, the auto industry recorded higher demand for vehicles in the wedding or festive season.  As the wedding season is coming up, many automakers anticipate that it will lead to higher demand for autos in the market as many purchase vehicles for personal use or as gifts. 

 

Apart from wedding and festive season, government incentives and infrastructure projects play a crucial role in strengthening the auto demand in the industry. In recent times, the auto industry believes that recovery in the infrastructure project by the government of India would lead to a boost to the auto sector. These plans will lead to faster infrastructure growth, expansion in income generation, mainly in rural regions. This will ultimately lead to strengthening of sales in the auto industry.

 

Additionally, other factors like interest rates and income tax cuts can also help in boosting demand for vehicles in the market. In case of contraction in interest rates, it will encourage people to take more loans for purposes like auto purchases as they have to repay less amount of loan. 

 

In the Budget 2025, the government of India announced income tax cuts up to Rs.12.75 lakhs of income. It led to expansion in disposable income of the people. It resulted in marginally easier for consumers to purchase new vehicles. 

 

International demand trend

In the third quarter of the financial year 2025, many automakers recorded robust strength demand in the international market which was higher than earlier estimates. In contrast to this, automobile component players recorded slowdown in demand trends in this third quarter. This current trend is anticipated to remain in the future quarters as well. 

 

In present times, the automobile industry in India is in a situation of uncertainty. The driving factors like contraction in interest rates, wedding season, and higher rural demand can lead to a boost to the revival of demand and sales in the auto industry in the upcoming terms.

 

 

 

The image added is for representation purposes only

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Autos, Business, Equities, Markets - January 15, 2025

Strong Consumer Sentiment Boosts Automobile Dispatches by 12% in 2024

Strong Consumer Sentiment Boosts Automobile Dispatches by 12% in 2024

Due to strong consumer sentiment that supported the strong demand for two-wheelers, automobile dispatches from firms to dealers increased by 12% last year compared to 2023, the industry group Society of Indian Automobile Manufacturers (SIAM) said on Tuesday. In 2024, total wholesales across all categories increased by 11.6% to 2,54,98,763 units from 2,28,39,130 units in 2023.

2024 has been a rather excellent year for the auto sector, according to a statement from Shailesh Chandra, President of the Society of Indian Automobile Manufacturers (SIAM). He added that the macroeconomic stability of the nation and favorable consumer attitudes contributed to the sector’s reasonable development across all vehicle segments.

Two-wheeler segment was the growth driver
According to SIAM, the two-wheeler segment was the main driver of last year’s growth, increasing by 14.5 percent in 2024 compared to the previous year. When compared to previous year’s dispatch of scooter, bike, and model figures, 2024 witnessed a hike of about 14.5% in 2024. Previously the figure dwelled at 1,70,75,432 units in 2023 but now has improved significantly to 1,95,43,093 units. Further, scooter sales have improved and increased to a healthy 20% year on year in 2023. Coming to motorcycle dispatches, there is a 12% bump year on year when compared to the previous year figures.

Passenger vehicle and three-wheeler segment saw a significant hike in sales
With sales of almost 43 lakh units, passenger cars increased by 4% in 2024 over 2023, as per the SIAM report. In a similar vein, three-wheelers saw a 7% increase in 2024, selling 7.3 lakh units. Though there are indications of improvement in the third quarter of 2024–2025, commercial vehicles saw a minor decline of 3% in 2024 compared to the previous year, with sales of 9.5 lakh units. When compared to last year’s figures, passenger car dispatches to dealers saw a significant uptick of about 10% in December of last year, compared to 2,86,390 units in December of 2023.

Further, dispatches of three-wheelers increased from 50,947 units in December 2023 to 52,733 units last month. According to SIAM Director General Rajesh Menon, passenger cars, commercial vehicles, and three-wheelers recorded their highest-ever sales in the October–December quarter. According to him, passenger car sales in the third quarter of 2024–2025 increased by 4.5% to 1.06 million units, up from the previous year.

Additionally, two-wheeler dispatches increased by 3% in the third quarter of 2024–25 compared to the same period last year, registering sales of 4.9 million units, while three-wheeler sales increased somewhat, reaching 1.89 lakh units. Finally commenting on commercial vehicle sales in this quarter, Menon added that the sales of commercial vehicles increased slightly by 1% when compared to the same period last year.

Major Trends in the automobile industry
With 2.5 crore cars sold last year (four-fifths of which were two-wheelers) and a comfortable growth rate of 11.6%, the Indian auto industry appears to be unaware of the economy’s problems or even the EV juggernaut. In fact, the number of sports utility vehicles (SUVs), the most aspirational category, has increased by about 17%, from 23.5 lakh to 27.5 lakh.

Nevertheless, the fall has greater consequences for the automakers than the rise. Perhaps more intriguing than the rise in SUV sales is the segment at which this surge has occurred: sedans. Traditionally, the auto industry’s poster boys, the standard sedan and small vehicles (hatchbacks), have suffered the most since SUVs have become the preferred choice for consumers. As a result, the number of passenger automobiles sold fell from 16 lakh in 2023 to just 13.7 lakh last year, a 14.4% decrease.

Motorcycles are another traditional category that is struggling with change. Although it ended the year with an 11.9% rise, it is far less than the nearly 20% growth scooters achieved in the same time frame. In reality, motorcycle sales actually decreased by about 2% during last year’s holiday October–December quarter, which is typically the time with the highest sales, while scooter sales increased by 13.6%, from over 15 lakh to 17 lakh.

The image added is for representation purposes only

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