Autobayng News Team
With auto sales already on a steady climb over the past three to four years, Nuvama expects momentum to continue in line with sector’s historical 30-year trough-to-peak cycle.“>
New Delhi: India’s automobile sector is set to remain in an extended demand upcycle through the rest of the decade, with passenger vehicles (PVs) likely sustaining growth until FY29, brokerage Nuvama said in a report.PVs, which bottomed out in FY21, surpassed their previous peak by FY23 and are now headed toward new highs. “PV is at a mid to advanced stage of the upcycle. Average/maximum duration of upcycle as per historical data is six/eight years; hence, upcycle can continue up to FY27/FY29,” Nuvama noted.Two-wheelers (2Ws) are also expected to see a longer runway. Having hit their trough in FY22, volumes could surpass the earlier peak by FY26, extending the upcycle until FY28–FY30. Tractors, aided by tax cuts and rural demand, are also expected to benefit from a sustained growth cycle.
GST 2.0 as a key trigger
The report highlighted the recent GST rationalisation as a major growth catalyst. Tax rates were cut from 28 per cent to 18 per cent for PVs under 4 metres, 2Ws below 350cc, three-wheelers, commercial vehicles, and auto components. For tractors and tractor parts, GST was reduced to 5 per cent from 12–18 per cent. EV rates remained unchanged with no cess.“These reductions have improved affordability and boosted profitability across the value chain,” Nuvama said.
The brokerage also pointed to additional drivers, including a potential government pay commission that could lift disposable incomes, possible interest rate cuts making vehicle financing cheaper, ongoing income tax reforms, and a strong pipeline of new model launches.
Long-term trajectory
With auto sales already on a steady climb over the past three to four years, Nuvama expects the momentum to continue in line with the sector’s historical 30-year trough-to-peak cycle.“Over the medium to long term, reforms and improving economic conditions will support sustained demand across segments, keeping the automobile sector on a strong growth track,” the report said
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