India’s Auto Industry Poised for Steady Growth Over the Next Three Years: Report

New Delhi: India’s passenger vehicle (PV) industry is expected to experience steady growth over the next three years, according to a recent report by Nomura. However, affordability concerns may continue to challenge the mass-market segment.

The report projects a 1.5% growth in the PV sector for FY25, followed by 5% in FY26 and 6% in FY27. While demand for premium vehicles and SUVs is expected to remain strong, the entry-level segment may struggle due to rising costs and affordability issues.

The Society of Indian Automobile Manufacturers (SIAM) has identified affordability as a key factor affecting the industry’s growth. Rising vehicle costs due to currency depreciation may make car ownership more expensive, particularly for lower-income buyers. Despite recent income tax cuts introduced by the government, their impact on boosting demand in the entry-level segment is expected to be limited.

Commercial and Two-Wheeler Segments Show Varied Growth Patterns

The commercial vehicle (CV) sector, which includes trucks and buses, is expected to remain flat in FY25, before registering 5% growth in both FY26 and FY27. This segment is closely tied to economic activity and infrastructure development, both of which will influence its expansion.

Meanwhile, the two-wheeler (2W) industry is projected to outperform other segments, with 10% growth in FY25, followed by 7% in FY26 and 6.5% in FY27. Similarly, the three-wheeler (3W) segment, which includes auto-rickshaws, is expected to grow 10% in FY25 and 5% in both FY26 and FY27.

Automakers Remain Cautious About Future Growth

While the Nomura report predicts a 5% year-on-year growth in the PV sector for FY26, automakers themselves anticipate lower growth of around 1.0-1.5%, indicating a more cautious outlook on future demand.

Overall, India’s auto industry is set for moderate expansion, with the two-wheeler and premium vehicle segments expected to drive growth, while the mass-market car segment may continue to face affordability constraints.

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