Domestic passenger vehicle sales will grow by 9-10 per cent during the ongoing fiscal driven by factors like low penetration levels and increasing disposable income, rating agency ICRA said Wednesday. The sales are expected to grow in the range of 9-11 per cent at a compounded annual growth rate (CAGR) over the next five fiscals.
“Industry’s long-term prospects remain favourable given the low penetration levels and increasing disposable income,” ICRA Senior Group VP, Corporate Sector ratings, Subrata Ray said.
The overall macro-economic indicators like favourable GDP growth, normal monsoon are expected to boost rural income, he added. Besides, the price-cut post GST and the low cost of car ownership due to falling interest rate and subdued fuel prices will provide impetus to the industry, Ray said.
He added that volume growth over the last few quarters is primarily driven by the compact utility vehicles. “ICRA expects the UV segment to outperform overall industry growth in the near to medium term given the shift in customer preference towards UVs and influx of new models,” the rating agency said.