Domestic passenger vehicle industry growth is expected to moderate to 4.5% in FY2025E due to weakness in the entry-level

Domestic passenger vehicle industry growth is expected to moderate to 4.5% in FY2025E due to weakness in the entry-level car segment and high base effect, Kotak Institutional Equities said in a report.

Volume growth is expected to moderate in FY2025E to 4.5% yoy owing to high base effect, receding order book in SUV segments across most of the OEMs, and sustained pressure in demand trends of entry-level hatchback volumes.

“We expect the SUV segment to continue to outperform. We expect market share of Maruti Suzuki to decline in FY2025E due to newer launches by competitors across SUV segments whereas we expect Tata Motors to gain market share as it will strengthen its positioning in the mid-size SUV segment with newer launches. Demand trends in the global luxury car market is expected to remain steady, which augurs well for JLR,” the report said.

“We expect domestic PV volume growth to remain steady at 6% yoy in FY2024E led by support from order backlog in the SUV segment,” it said.

SUV segment will continue to outperform industry growth on account of newer launches by the OEMs, and changing consumers’ preference. Also, we expect the hatchback and sedan segments to underperform owing to weak demand trends in entry-level segment, and shift of consumers from premium hatchback to micro/compact SUV segments aided by overlapping price points.