In FY24, the automobile sector in India witnessed a growth of around 19%, which took the industry valuation to a whopping ₹ 10.22 lakh crore. This robust Indian automobile industry growth can be linked to the high demand in the utility and especially SUV segment. The volume of auto sales increased by 23% and 16% respectively for these two segments of automobiles in FY24, which helped the overall industry grow rapidly. The overall value increased by 39%, which made this exponential growth a reality.
Factors Driving the Growth in the Indian Automobile Industry
The primary factors which drove the growth in this sector include –
- The average rise in the price level which boosted the price of automobiles
- Higher demand for the vehicles with premium features such as sunroof, etc.
- People are shifting to higher value vehicles, hybrid or automatic models, and premium features vehicles.
- The supply chain constraints are also easing up which is playing a pivotal role in the growth of this industry
- Finally, robust growth in the EV industry adds to the overall auto industry in the country.
Segment-wise Growth
Coming to the different segments of the automobile industry, the two-wheeler segment grew around 10% in volume of sales in FY24 while the value of the segment increased by 13%.
Similarly, the three-wheeler segment witnessed a 16% growth in the same fiscal year in the volume of sales while the value of the segment increased by 24% during the same period.
Coming to the commercial vehicle segment, witnessed a growth of 3% in volume while the value increased by 7% in FY24.
Contrary to these segments, the passenger vehicle segment witnessed a sharp decline in sales volume by 9% and 4% in value, which can be mainly linked to the price rise in this segment.
Also in 2024, India became the largest producer of two-wheelers with over 20 million units of two-wheelers manufactured in the year. Also, this segment dominates the automobile industry with a 76% share in the sale volume and 18% in value terms.
Another important factor that is driving this industry has been the lower price level of the vehicles compared to other countries. However, the overall growth in the global automobile industry acted as a catalyst here.
Top Five Automobile Industry Stocks
The top five automobile industry stocks are as follows –
- Maruti Suzuki: India’s favorite automobile company holds a market share of around 43.94% in the passenger vehicle segment in India as per reports from January 2024. This is undoubtedly the largest automaker in the country and its net profit stood at ₹ 3130 crore in Q3 of FY24 and ₹ 3877 crore in Q4.
- Tata Motors: The next on the list is Tata Motors, which holds a 34.96% share in the commercial vehicles market as of January 2024. It has its leading presence in all the automobile segments such as utility vehicle, passenger, and commercial vehicle segments. The net profit of the auto giant stood at ₹ 4570.05 crores in the third quarter and ₹ 2126.40 crores in Q4 of FY24.
- Hero Moto Corp: By two-wheelers, India means Hero Moto and this company is not only the largest two-wheeler producer in the country but across the globe. The net profit of the company was at ₹ 1073 crore during the third quarter of FY24 and ₹ 1016.05 crore in Q4FY24.
- M&M: Mahindra & Mahindra leads with a 67.6% market share in the three-wheeler EV segment, and 45.5% in the LCVs segment. Its overall sales have also increased by a whopping 50% on a YoY basis, to 698456 units in FY23. However, the main segment in which M&M rules is the farm equipment segment where it has a 41.2% market share. The net profit in Q3FY24 stood at ₹ 2453.98 crores and in Q4FY24 it was ₹ 2038.21 crore.
- Bajaj Auto: Another major player in the two-wheelers segment is Bajaj Auto after Hero Moto Corp. Bajaj holds a 17.3% market share in the two-wheeler segment as of FY23 but it has dropped from 18.2% in FY22. However, the domestic sales of the company in FY23 increased by 8.4% on a YoY basis. In the three-wheeler segment, Bajaj Auto leads the industry with a 73% market share and in the three-wheeler passenger vehicles segment; it has a market share of around 79.3% as of FY23. The net profit for the third and fourth quarters of FY24 was ₹2041.88 crores and ₹1936 crores respectively.
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Conclusion
The automobile industry looks promising with the increasing demand for premium vehicles and increased demand in the commercial vehicles segment as well. Moreover, the cooling down supply chain concerns also aid the growth of the segment.
Sources:- https://economictimes.indiatimes.com/
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