Study claims SUVs will drive 5-7% growth in India’s passenger vehicle sales volume by FY25

SUVs in India are expected to propel the growth in the Indian passenger vehicle segment further in FY25, while entry-level cars will continue to face challenges, as per a study by Crisil. The study predicts a rise in passenger vehicle sales volume of up to seven per cent in the next financial year.

The study highlights the sustained demand for SUVs in India as a driving force behind the growth in the passenger vehicle market. The market share of SUVs in the country has doubled to around 60 per cent of total domestic passenger vehicle sales in the current financial year from 28 per cent in FY2019. The study expects this trend to continue, supported by new model launches and normalized semiconductor availability.

Anuj Sethi, Senior Director at Crisil Ratings, stated, “While the overall PV volume is seen rising 5-7 per cent next fiscal, we expect demand for SUVs to accelerate at twice the pace at over 12 per cent, driven by an array of feature-laden launches at competitive price points, varied technology options including hybrid and electric, and increased access to credit.”

On the other hand, the study also pointed out the challenges faced by the entry-level car segment, with automakers like Maruti Suzuki, Tata Motors, and Hyundai struggling due to weak demand attributed to factors like rural market conditions and affordability issues. The overall passenger vehicle segment growth is driven by the SUV trend, while entry-level cars face obstacles due to increased costs and regulatory pressures.

Despite the projected growth in domestic passenger vehicle sales, the export segment is expected to face challenges in the next fiscal. The slowdown in passenger vehicle exports is attributed to inflationary headwinds and limited availability of foreign exchange in key export markets like Latin America, Southeast Asia, and Africa. This trend is likely to persist in the upcoming financial year.