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Following an estimated expansion of 27-30% in FY23, Credit Rating Agency ICRA in its latest report has said that the revenues of the domestic automobile dealership industry is likely to grow by 11-13% in FY24, aided by 6-9% volume growth and an increase in vehicle prices. It said factors like improving consumer sentiments, as seen through a continued preference for personal mobility and rising disposable income, easing supply-side constraints, better features in the new product models, change in product-mix with increasing skew towards high-priced vehicles, etc., are expected to favourably support the sales growth in the consumer segment. 

According to the report, in the commercial segment, improving economic activities, rising spends in infrastructure and mining activities stable financing environment shall support the growth. Potential headwinds could arise from adverse monsoons or the occurrence of the El Nino and its impact on rural demand, supply-related issues, general inflation, and further hardening in financing rates.

Segment-wise, report said demand for commercial vehicles (CV) is expected to be supported by replacement demand, pick-up in mining, infrastructure construction activities, and overall healthy fleet utilisation levels. In the passenger vehicle (PV) segment, underlying demand trends remain stable, although supply-chain related factors, increase in the cost of ownership, and monsoon performance are key monitorables. With the PV segment, demand remains buoyant in the segments like special-utility vehicles and luxury cars. In the two-wheeler (2W) segment, headwinds like elevated ownership costs, inflation, and high financing costs remain a challenge, although demand is expected to recover gradually.