Rating agency ICRA in its latest report has stated that the Indian passenger vehicle industry’s long-term prospects remain favourable, supported by the factors like low penetration levels and increasing disposable income, it also said that domestic passenger vehicle sales will grow by 9-10% during the fiscal year 2017-18 and added that the sales are expected to grow in the range of 9-11% at a compounded annual growth rate (CAGR) over the next five fiscals.
As per the report, overall macroeconomic indicators too remain favourable with gross domestic product (GDP) growth expected at 7.2% in FY18, normal monsoon expectations which will boost rural income. Besides, the price-cut post newly implemented goods and services tax (GST) and the low cost of car ownership due to falling interest rate and subdued fuel prices will provide impetus to the industry.
The rating agency further added that volume growth over the last few quarters is primarily driven by the compact utility vehicles. Thus, it is expecting that the utility vehicles segment to outperform overall industry growth in the near to medium term given the shift in customer preference towards utility vehicles and influx of new models.
