BackDomestic passenger car market to grow 5-7% in 2015-16: Icra
The growth will be driven by improved customer sentiment against the backdrop of lower cost of ownership and aggressive new models launches
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Mumbai: Icra Ltd, an associate of Moody’s Investors Service, expects the domestic passenger vehicle industry to grow at 5-7% in financial year 2015-16 and 8%-10% the year after.
The growth will be driven by improved customer sentiment against the backdrop of lower cost of ownership and aggressive new models launches planned by auto makers over next two years, said the agency in a report on Friday.
As per Icra estimates, first time buyers accounted for approximately 50% of overall new car purchase in 2012.
This came down to approximately 37% in 2014 owing to the increase in cost of ownership. Over the last one year, a gradual but steady decline in fuel prices (especially petrol), easing financing norms and an overall improvement in customer sentiment has helped bring new buyers back into the market.
Consequently, the small car segment, which constitute major share of first time buyers will witness improved volume traction in the months ahead, said Icra.
Meanwhile, one of the segments that have benefited from the slowing sales of new cars is the used car market, Icra said. Fuelled by the entry of organized firms, increasing awareness and financing options, the Indian used car market has seen steady growth over the last few years, as customers deferred their new car purchases and a few of them opted for pre-owned cars.
The Indian used car market, which is currently about 1.2x of new car markets is still quite small as compared to developed markets (~3.0x). Icra expects the Indian used car market to outpace domestic new car sales growth in the near to medium term.
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