The demand for premium variants is expected to remain healthy, while that of entry-level variants may remain muted due to high interest rates and an inflationary environment, according to CareEdge.
The Electric Four-Wheeler (E4Ws) segment — which contributes about 6 per cent to the total EV market sales — volumes have grown significantly in the past few years, it said.
Major Original Equipment Manufacturers (OEMs) have planned to introduce more EV models in the future, suitable for the domestic market that could boost their adoption and increase competition in the market, it added.
“The passenger vehicles (PV) industry is likely to record a volume growth of around 18-20 per cent in FY24 as pent-up demand levels off amid hike in vehicle prices,” CareEdge Research Director Tanvi Shah said.
This upward trend of 18-20 per cent, she said, is likely to persist in FY25 led by a strong order book, improvement in supply chain, robust demand for new model launches and increasing demand in the Utility Vehicles (UVs) segment. The PV segment constitutes 18 per cent of the country’s total domestic sales, as per the report. The PV domestic sales grew 25 per cent year-on-year in the first nine months of FY24, it said, adding that the segment’s growth trajectory continued for two consecutive fiscal years with improved vehicle availability and an influx of new and refreshed models from various OEMs.
Further, the exports during the April-December period of the current fiscal grew 3 per cent compared to the same period last year, aided by increasing demand from UVs and premium segments, consumer preference for cost-effective personal mobility, and the introduction of new models across various export markets.
However, the ongoing geopolitical tensions across key export markets have been hindering vehicle sales, CareEdge said.
In FY23, the PV industry recorded the highest domestic sales with an annual volume growth of 27 per cent, it said.
However, the growth rate of the passenger vehicle industry may moderate due to a strong base effect of the last fiscal as well as macro factors, including high interest rates, inflation, and cost impact from new regulatory norms.
Though commodity prices have softened, players continue to hike prices to recover earlier surges in raw materials, it said.
Further, the Indian passenger vehicles market faces hurdles in terms of preference for FY24 manufactured vehicles and a notable slowdown in demands and bookings post-festivities.
EV adoption in the four-wheeler segment has been low with E4W penetration in the total Indian four-wheeler market at a low of 2 per cent in the April-December period, as per the report.
It also said while electric cars were initially priced higher than their petrol and diesel counterparts, the cost of ownership has come down significantly in recent years due to various government incentives and continuous advancements in battery technology for cost reduction, increased battery capacity, and tax exemptions.