Challenges and opportunities in India’s Passenger Vehicle market: Report |

Kotak Institutional Equities predicts that the growth of the domestic passenger vehicle industry will slow down to 4.5% in FY2025E due to challenges in the entry-level car segment and a high base effect, reported IANS. They anticipate that volume growth will also moderate to 4.5% year-on-year due to factors like a high base effect, decreasing order book in SUV segments for most original equipment manufacturers (OEMs), and ongoing pressure in demand for entry-level hatchback volumes.
The report suggests that the SUV segment will continue to outperform, with Maruti Suzuki expected to lose market share in FY2025E due to competition from new launches across SUV segments. Conversely, Tata Motors is anticipated to gain market share by strengthening its position in the mid-size SUV segment with newer launches. The global luxury car market is expected to remain stable, which is positive for Jaguar Land Rover (JLR).

For FY2024E, domestic passenger vehicle volume growth is projected to remain steady at 6% year-on-year due to support from order backlog in the SUV segment. The SUV segment is expected to outperform industry growth due to new launches and changing consumer preferences, while hatchback and sedan segments may underperform due to weak demand in the entry-level segment and shifting consumer preferences towards micro/compact SUV segments.
The report forecasts that Maruti Suzuki will lose market share over FY2025-26E, primarily due to competition from new launches in SUV segments and weak demand in the entry-level hatchback segment. Tata Motors is expected to improve market share by launching new models, especially in the SUV and electric vehicle (EV) segments. Mahindra & Mahindra (M&M) is anticipated to gain market share over FY2024-26E due to a strong order book in the large SUV segment.
The report maintains a SELL rating on Maruti Suzuki with a revised Fair Value (FV) of Rs 8,700, citing its inability to significantly increase market share despite multiple launches and the expectation of further market share loss with new competitor launches. Similarly, a REDUCE rating is maintained on Tata Motors with a revised FV of Rs 800, as the near-term positives are seen as already priced in, with medium-term risks due to rapid electrification in China and Europe for the JLR business.