from sub-one tonne vehicles will curb sharper growth in sales volume, as fewer trucks will now be required to
transport the same quantity of material.

Upper-end light commercial vehicles (ULCVs) offer the transporter lower returns, as compared with ICVs, and
are most suited for captive use. Entry restriction on ICV trucks and higher tonnage MHCVs is expected to keep
demand from this segment buoyant. However, higher toll on ULCV trucks vs. pickups will limit growth in the
segment.

Three-wheeler segment to grow at a tepid pace in long term

In the past five years, SCVs, especially sub-one tonne models (0.75 tonne payload), were substituting large three-
wheelers of similar payload capacity, given the SCVs' ability to carry loads beyond payload capacity, run on
longer routes, maintain better balance, and be more cost-efficient. This pace of substitution is expected to slow
down as much of the shift has already taken place. Rural areas still prefer use of three-wheelers because of a lack
of infrastructure. Consequently, goods three-wheeler sales are expected to record a growth 2-4% CAGR between
fiscals 2020 and 2024 after declining by 22-24% in fiscal 2020.

Bus demand to grow moderately in the long run

CRISIL Research projects domestic bus sales to expand on an abysmal base of fiscal 2021 (decline expected in
fiscal 2021 at 80-85%) due to increasing demand for inter-city/state travel, aided by better road infrastructure, and
higher personal disposable incomes. The unregulated segment, which primarily caters to demand from schools,
companies and inter-city travel by private operators, will remain the largest end-user. However, further expansion
in bus sales would be impacted by the implementation of metro-rail and monorail in several cities. Due to a decline
in fiscal 2021, bus demand is expected to grow by 2-4% CAGR between fiscals 2020-2024.

Passenger vehicle

Industry growth to be slower than GDP growth

CRISIL Research projects domestic sales of cars and utility vehicles (UVs) to increase at a compound annual
growth rate (CAGR) of 5-7% over fiscals 2020-2024, better than 1.3% CAGR logged between fiscals 2015 and
2020. The growth is expected to be better (post fiscal 2021) as consecutive years of double-digit decline would
lead to a very low base in fiscal 2021. Post fiscal 2021, healthy growth expected over this low base due to moderate
macroeconomic growth, increasing disposable incomes, relatively stable cost of vehicle ownership and lower fuel
prices. Other factors that would aid demand are increasing urbanization, government support to farm incomes,
and improved availability of finance. However, increasing congestion in metro cities and rising popularity of
shared mobility services are likely to restrict car sales in the long term.

Passenger vehicle domestic sales outlook FY 2020- FY 2024

   

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Note: Small car segment includes Mini, Micro, Compact segment of passenger vehicles, Large car segment includes Super
Compact, Mid-size, Executive, Premium of passenger vehicles
Source: Society of Indian Automobile Manufacturers, CRISIL Research

Post significant decline, both small cars and UVs to witness healthy growth in long term

After a sharp decline in fiscal 2020 and 2021, sales of car as well as UV segment to grow at a healthy pace.
Hyundai and Tata are expected to open a larger number of outlets in rural and semi-rural areas as well as estimated
higher farm profitability are expected to boost sales. Moreover, the increase is cost of ownership is likely to be

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