India’s automotive industry is set to experience a varied performance across different segments in the first half of 2024, as highlighted in the latest Nuvama report. The two-wheeler (2W) sector is forecasted to grow by 8% year-on-year (YoY) from January to July 2024. This positive growth is driven by strong rural demand and sustained urban sales. The favourable monsoon conditions have enhanced rural sentiment, contributing to increased sales in this segment. Additionally, dealers are expected to build up their inventories ahead of the festive season, leading to wholesale volumes surpassing retail sales.

In contrast, the tractor industry is projected to see a marginal growth of approximately 4% YoY. This growth is supported by improved farmer sentiment, owing to normal monsoon conditions and favourable terms of trade. The terms of trade indicate that output inflation is outpacing input inflation, which benefits the farming community and subsequently the tractor market.

On the other hand, the Passenger Vehicle (PV) segment is likely to face a slight decline in sales by around 3% YoY. This decline is attributed to the high base effect from last year's early festive season, which saw a surge in sales. Similarly, the Commercial Vehicle (CV) sector is expected to experience a minor contraction of about 4% in annual growth. The high base effect for cargo vehicles plays a role in this anticipated decline, even though there are positive indicators such as increased e-way bill generation and better freight availability.

The Nuvama report highlights that August 2024 volumes will reflect mixed results across the automotive industry. While the 2W and tractor segments show growth, the PV and CV segments are expected to face challenges. This mixed performance underscores the varied dynamics within the automotive sector.

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In terms of exports, India’s automobile industry has made notable strides. The country exported a total of 4,500,492 vehicles in the fiscal year 2023-24, with 76.8% of these being two-wheelers. This highlights the significant role of two-wheelers in India's automotive export market.

Looking ahead, India has set an ambitious goal to double the size of its automobile industry to US$ 178.70 billion (Rs. 15 lakh crore) by the end of 2024. This target reflects the country’s commitment to enhancing its position in the global automotive sector and driving further growth in the industry.

The Nuvama report provides a comprehensive overview of the expected performance across various automotive segments, offering valuable insights for stakeholders in the industry. The growth in the two-wheeler and tractor segments, alongside the challenges faced by passenger and commercial vehicles, paints a detailed picture of the current state and future prospects of India’s automotive market.

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