Passenger Vehicle Sales Seen Growing 3-5 per cent in FY25: Report

As to the study published by credit ratings firm CareEdge, sales of electric cars in the passenger vehicle (PV) segment are expected to reach a volume of approximately 1.30-1.50 lakh units in FY25, after a strong rise of 90% with volumes reaching 90,432 units in FY24. This is due to an improving penetration rate.

Passenger Vehicle Sales Seen Growing 3-5 per cent

Due to a high base effect from FY24, a declining order book, and a decline in demand for entry-level variations, passenger car sales are expected to increase by a mild 3–5% this fiscal year, according to a research released on Monday.

The credit rating company CareEdge said that after strong growth of 90% with volumes reaching 90,432 units in FY24 and an increasing penetration rate, In the passenger vehicle (PV) market, sales of electric cars are anticipated to reach a volume of 1.30–1.50 lakh units by FY25.

Pent-up demand following the COVID recovery and new product introductions drove significant year-over-year volume increase in the PV industry in FY22 and FY23, the report stated.

Utility vehicle sales increased by 43.2% in FY22 and 33.2% in FY23, indicating their importance.

Following the pandemic, the business benefited from reduced lending rates as well as a rise in people’s demand for personal mobility, according to CareEdge.

Up until FY12, utility vehicles accounted for 10-15% of all passenger car sales, according to CareEdge.

Between FY13 and FY24, it expanded at a compound annual growth rate (CAGR) of 15.51 percent due to changes in customer preferences. toward utility vehicles with new models, improved and creative designs, and advanced functional, safety, and technology characteristics. The utility vehicle market has steadily outpaced the growth rate of the passenger car industry during the last 10 years.

According to the report, utility vehicle sales volume surpassed that of passenger cars and vans in FY24 for the first time.

Utility vehicles currently make up more than 55% of all new PV sales, and CareEdge predicted that over the long term, their percentage of PV sales overall will increase.

PV Industry, Passenger Vehicle Sales Seen Growing 3-5 per cent

The PV industry is expected to exhibit moderate volume growth of around 3-5 per cent in FY25 on account of a high-base effect of FY24, shrinking orderbook and expectation of persistently subdued demand for entry-level variants in FY25,” Arti stated. Roy, a CareEdge Ratings Associate Director.

She said that the strong demand for SUVs and newly released models, along with the anticipation of interest rate reductions in the second half of FY25, should maintain the sales momentum.

However, the PV industry’s volumes increased by 7.4% in FY24, in accordance with CareEdge Ratings’ prediction of volume growth of roughly 7-9%, the ratings stated.

According to the report, the leveling off of pent-up demand amid rising car costs, the high base impact of FY23, and the high-interest rate environment were the causes of the year-over-year volume growth in FY24.

a healthy order backlog for FY24, strong demand for the introduction of new models, and rising demand for SUVs maintained the sales trend, according to the data.

According to Hardik Shah, Director at CareEdge Ratings, entry-level models are likely to continue to face decreased demand due to a slowdown in both rural and urban sectors, even if the market for premium cars is expected to flourish due to a jump in demand for luxury and high-end models.

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