The Indian automotive industry plays a vital role in the country's economic growth, including vehicles that cater to various needs and sectors. Two key segments within this industry are two-wheelers and commercial vehicles (CVs). Both segments have experienced significant transformations and faced unique challenges over the past few years, particularly in the wake of the COVID-19 pandemic.

Two-wheelers, primarily motorcycles and scooters, dominate the Indian market due to their affordability, fuel efficiency, and versatility. They are essential for personal mobility, especially in urban areas. The rise in electric vehicle (EV) adoption has further boosted this segment, reflecting a shift towards sustainable options.

On the other hand, commercial vehicles, including medium and heavy commercial vehicles (MHCVs) and light commercial vehicles (LCVs), are critical for the logistics and transportation sectors. The CV industry has seen fluctuating growth rates influenced by economic conditions, government regulations, and infrastructure developments.

Commercial vehicles (CV):

- Growth trends:

  - FY22 and FY23: Strong growth of 30.7% and 28.7% respectively, driven by post-COVID recovery.

  - FY24: Growth slowed to 0.7% due to several factors, including higher vehicle costs from BS VI emission norms and election-related disruptions.

- Segment performance:

  - MHCVs: Growth driven by industrial and infrastructure demand.

  - LCVs: Boosted by e-commerce, but face challenges due to rising costs and high interest rates.

- FY25 outlook: Expected decline of 3-6% overall, with potential recovery in H2FY25 due to infrastructure projects and interest rate cuts.

Two-wheelers:

- Growth trends:

  - FY23: Sales reached 19.51 million units, an 8% growth from the previous fiscal.

  - FY24: Continued growth at 9.8%, achieving 21.43 million units in sales.

  - Exports: Decline due to challenges in African markets, but recent recovery observed.

- Segment performance:

  - Motorcycles: Dominant segment with steady growth; entry-level motorcycles show slower growth compared to premium segments.

  - Scooters: Significant growth driven by urban demand.

- FY25 outlook: Expected growth of 7-9%, driven by higher EV sales, recovery in exports, and favorable domestic conditions.

 Key drivers and challenges

Commercial vehicles:

- Drivers:

  - Infrastructure development: Post-monsoon projects to drive MHCV demand.

  - Government initiatives: Mandatory scrapping of older vehicles, interest rate cuts.

- Challenges:

  - Cost pressures: Transition to BS VI norms, higher vehicle prices.

  - Economic conditions: Slowdown due to election-related disruptions, weak rural demand.

Two-wheelers:

- Drivers:

  - EV adoption: Significant growth in electric two-wheeler sales due to lower operating costs and government incentives (FAME II, EMPS 2024).

  - Urban demand: Scooters and premium motorcycles gaining popularity among urban commuters.

- Challenges:

  - Export market volatility: Recovery dependent on stabilisation in key markets.

  - Competitive landscape: Continuous innovation and introduction of new models required to maintain growth.

 EV segment

Commercial vehicles:

- Growth: Notable increase in EV registrations, especially in e-buses and LCVs.

  - E-buses: Surge from 217 units in FY21 to 3,400 units in FY24.

  - E-LCVs: Growth driven by last-mile logistics needs.

- Future outlook: Strong demand expected due to government initiatives like the PM e-bus Sewa Scheme.

Two-wheelers:

- Growth: Remarkable increase in EV sales, with a growth of 188% in FY23 and 30% in FY24.

  - Market share: EVs accounted for 4.54% of total two-wheeler sales in FY23.

- Future outlook: Continued growth anticipated with the support of government policies and changing consumer preferences.

 Comparative insights

1. Market size and growth:

   - Two-wheelers: Larger market with higher growth rates in recent years compared to CVs.

   - CVs: Experienced strong growth post-COVID but faced more volatility in FY24.

2. Segment dynamics:

   - Two-wheelers: Dominated by motorcycles with significant growth in scooters and EVs.

   - CVs: Growth concentrated in MHCVs due to infrastructure projects, with LCVs facing cost-related challenges.

3. EV adoption:

   - Two-wheelers: Rapid adoption with increasing market share and strong government support.

   - CVs: Slower adoption but significant growth in specific segments like e-buses and LCVs.

4. Challenges:

   - Two-wheelers: Export market instability, need for continuous innovation.

   - CVs: High vehicle costs, economic and infrastructure-related slowdowns.

 Conclusion

The two-wheeler industry in India is set for continued growth, driven by strong domestic demand and increasing adoption of EVs. In contrast, the CV sector, while facing short-term challenges, shows potential for recovery in the latter half of FY25,. This is provided they will be supported by infrastructure projects and favourable financing conditions. Both sectors are crucial to India's automotive landscape, with their respective dynamics offering unique opportunities and challenges. However, soaring prices, road accidents, unemployment and diminishing demand keeps the future of the automotive industry uncertain.

(Data courtesy: CareEdge Ratings)