2W volume growth in FY25 seen at 10-12%, PV sales likely to grow 6-7%: Prabhudas Lilladher

Two-wheeler sales volume had a strong start to this financial year with double-digit growth in April and is likely to clock 10-12 percent growth on year in 2024-25, according to a report from brokerage Prabhudas Lilladher. On the other hand, passenger vehicle sales had a slow start this year and are projected to moderate to 6-7 percent on a high base.

In April, the brokerage estimates that two-wheeler sales rose around 26.6 percent on a year-on-year basis while passenger vehicle sales grew by 3.5 percent. Chaitra Navratri and wedding season were major demand drivers for the month. 

“Going ahead, we expect the automotive industry to grow at a moderate pace due to catching up of pent-up demand and high base effect. Amongst segments, we expect 2W segment volume to grow by ~10-12% over FY24, whereas PV is expected to grow at a moderate pace (+6-7% over FY24),” Prabhudas Lilladher, which tracks the major listed OEMs in the automotive sector said. 

As per the SIAM data, two-wheeler makers sold 18 million vehicles in the financial year 2024, a growth of around 13 percent from FY23. Strong demand in the second half of the year on the back of festival and wedding seasons helped the industry offset the moderate growth in the first half of the year.

Though the two-wheeler sales remain below the all-time high of 2018-2019, there have been some green shoots, particularly in the rural areas since last year. Better disposable income, infrastructure, recovery from pandemic worries, favourable weather conditions, and e-commerce activity have boosted consumer sentiments.

On the passenger vehicle front, the brokerage expects the utility vehicle segment to outpace the market with new launches and lead the overall passenger vehicle sales. Sports utility vehicle sales have been driving the growth in passenger vehicle sales, offsetting the weakness in the small car sales.

Passenger vehicle volumes grew by around 8 percent in FY24 to a record 4.4 million units. Utility vehicle sales accounted for close to 60 percent of the volume amid new launches and the shift in consumer preference towards sports utility vehicles. Sales of entry-level cars or small hatchbacks continued the declining trend.

While Prabhudas Lilladher is projecting a 6-7 percent growth in the current financial year, automakers have projected a much lower growth rate. At the SIAM 'Looking Ahead Conclave' held in January, companies forecast the passenger vehicle industry volume to be at 4.3 million units in FY25, which could be a growth of 2-2.5 percent.

The sales moderation can be attributed primarily to the high base in FY24. Also, the weakness in entry-level or small cars is likely to drag the overall sales as the segment attracts a lot of first-time buyers to the market.

“The shift in preference and trend of premiumisation in the two-wheeler and passenger vehicle segment shall prove to be a growth catalyst for auto OEMs,” Prabhudas Lilladher noted in the report.