The two-wheeler industry is expected to grow by 8%, while the tractor sector is projected to see an annual increase of 4%, according to Nuvama

New Delhi [India], August 28: The two-wheeler (2W) industry is expected to see high single-digit growth, with an estimated 8 percent year-on-year (YoY) increase, while the tractor industry is projected to experience marginal growth of around 4 percent YoY in the domestic market, according to a report by Nuvama, a wealth and investment firm.

The growth in the 2W market is mainly attributed to strong rural demand alongside sustained urban sales. A favorable monsoon has boosted rural sentiment, leading to increased sales. Moreover, wholesale volumes are anticipated to surpass retail sales as dealers build up inventory in preparation for the upcoming festive season.

The positive outlook for the tractor industry is supported by improved farmer sentiment due to normal monsoon conditions. Additionally, favorable terms of trade, with output inflation outpacing input inflation, have further strengthened the sector.

The Passenger Vehicle (PV) segment is likely to witness a slight decline in sales by about 3 percent YoY in the domestic market. This subdued performance in the PV segment is largely due to the early onset of the festive season last year, which has created a high base effect.

The report also indicates that the commercial vehicle (CV) industry is expected to face a slight contraction of around 4 percent in annual growth in the domestic market. This decline is primarily attributed to a high base effect for cargo vehicles, despite positive indicators such as increased e-way bill generation, suggesting better freight availability for transporters.

Overall, the report suggests that the August 2024 volumes will present a mixed scenario for the automotive industry, with growth in the 2W and tractor segments, while the PV and CV segments may face challenges.

Among 2W Original Equipment Manufacturers (OEMs), mass-market players are expected to perform well, according to the report. In the Indian automobile market, 2-wheelers and passenger cars hold 75.3 percent and 17.6 percent of the market share, respectively. While passenger car sales are primarily dominated by small and mid-sized cars, there has been a significant rise in SUV sales in recent years.

In the export market, India's automobile exports for 2023-24 were recorded at 4,500,492 vehicles, with 2-wheelers making up 76.8 percent of total exports. During the same period, passenger vehicle exports grew from 662,891 units to 672,105 units, registering a positive growth of 13.8 percent.

India aims to double the size of its auto industry to Rs 15 lakh crore by the end of 2024.