Automobile market to see growth of 15% during festive season: Nuvama report

The growth is anticipated by the increased enquiries and a revival of rural demand, which accounts for more than 55 percent of the two-wheeler (2W) market. Enquiries have also gone up for passenger vehicles (PV), and a rural push is likely in the PV segment as well. According to the report, this momentum is likely to benefit mass-market original equipment manufacturers (OEMs) like TVS Motors, Hero MotoCorp, and Bajaj Auto, as opposed to premium OEMs like Eicher Motors, which manufactures Royal Enfield (RE) motorcycles. New models, including the TVS Jupiter and Hero Xtreme 125R, are expected to support 2W sales growth. In the PV segment, rural demand constitutes over 35 percent of the market share, with growth expected in the single digits during the festive season. Utility vehicle (UV) sales are likely to witness double-digit growth, outpacing hatchbacks. This trend will benefit manufacturers such as Mahindra & Mahindra and Tata Motors over Maruti Suzuki, with new models like the Mahindra Thar Roxx and Tata Currv expected to attract customers. The report suggests that mass-market players are expected to outperform, while premium segments may face more subdued growth. In anticipation of strong festive demand, dealers have increased inventories for 2Ws and PVs by up to 1.5 to 2.5 months. The increased inventory build-up indicates confidence among manufacturers and dealers alike, who expect a surge in sales during the festive period. Commercial vehicle (CV) sales are likely to grow at a modest pace, with demand for medium and heavy commercial vehicles projected to rise in single digits. This growth will be driven by replacement demand as freight availability continues to improve across the country. Tractors are expected to perform well over the financial years 2024-26, with volume growth likely in the high single digits. Looking ahead, the report adds that the long-term outlook for the 2W and tractor segments remains strong. Historical data suggests that the sales cycle, which typically spans two to four years, could see peaks in the next few years, supporting higher volume growth for 2Ws and tractors compared to PVs and CVs. The report forecasts a high single-digit volume growth for 2Ws and tractors over FY24-26E, while PVs and CVs are likely to grow in low single digits.