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PV sale volumes to grow 3%-5% in FY25; CareEdge
Industry News- Jun 25,24
The industry is expected to exhibit moderate volume growth on account of a high base effect of FY24, shrinking order book and expectation of persistently subdued demand for entry-level variants in FY25.
In FY22 and FY23, the PV industry experienced substantial year-on-year volume growth due to pent-up demand post-Covid recovery and new product introductions. UVs played a significant role, with volumes increasing by 41.0% in FY22 and 33.2% in FY23. The industry benefitted from lower interest rates and an increased desire for personal mobility in the wake of the pandemic.
However, during FY24, in line with CareEdge Ratings’ expectation, the PV industry recorded moderate volume growth of 7.4%. Factors contributing to this included the levelling off of pent-up demand, higher vehicle prices, and the high base effect of FY23. Despite these challenges, a strong order book in FY24, new model launches, and increasing SUV demand kept the sales momentum rolling. While the passenger cars and vans segment volumes de-grew by 7.2% in FY24 on account of pressure on demand for entry-level variants due to high-interest rates, an inflationary environment and increased input costs given the mandatory safety features, and BS-VI emission standards which translated to higher vehicle prices, the SUV segment continued its dominance, with volumes surging by 22.4% due to strong demand and a robust order book.
FY25 outlook
The PV industry is expected to witness moderate volume growth of around 3-5% in FY25 on account of a high base effect of FY24, shrinking orderbook and expectation of persistently subdued demand for entry-level variants. The industry is however set to sustain its sales momentum, boosted by the strong demand for new model launches and SUVs coupled with expectation of interest rate cuts in the second half of FY25. While the market for premium vehicles is predicted to thrive, driven by a surge in demand for luxury and high-end models, entry-level variants are likely to see continued diminished demand due to a downturn in both rural and urban markets. The rural sector is feeling the pinch as entry-level vehicles are becoming more expensive, whereas urban consumers are increasingly opting for SUVs, reflecting a shift in market preferences.
Racing ahead
UVs, which contributed 10-15% of total passenger vehicle sales volumes until FY12, grew at a CAGR of 15.51% between FY13 and FY24 as consumer preference shifted towards UVs that offered better and innovative designs, new models, technological, functional and safety features. For the past decade, the UV segment has consistently outperformed the PV industry growth rate. In FY24, for the first time UV sales volume stood higher than Passenger cars and vans. Currently, UVs account for over 55% of all new PV sales and its share in overall PV sales is expected to further rise over the medium term.
Electrifying forward
Electric car sales continue to improve over the last five years. For FY24, electric car retail sales recorded y-o-y growth of 90% with volumes at 90,432 units. With an improving penetration rate, electric car volumes, in the PV segment, are likely to clock sales volume of around 130,000 -150,000 for FY25.
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“The PV industry is expected to exhibit moderate volume growth of around 3-5% 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. Strong demand for new model launches and SUVs coupled with the expectation of interest rate cuts in the second half of FY25 is expected to keep the sales momentum rolling,” said Arti Roy, Associate Director, CareEdge Ratings.
“While the market for premium vehicles is predicted to thrive, driven by a surge in demand for luxury and high end models, entry-level variants are likely to see continued diminished demand due to a downturn in both rural and urban markets. The rural sector is feeling the pinch as entry-level vehicles are becoming more expensive, whereas urban consumers are increasingly opting for SUVs, reflecting a shift in market preferences,” concluded Hardik Shah, Director, CareEdge Ratings.
PV industry
photovoltics
CareEdge Ratings
Hardik Shah
Arti Roy
energy sector
green energy
sustainability
clean energy
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