electric vehicles could have a maximum impact/threat to the three wheeler passenger segment among all
automotive segments.

Projected growth in three-wheeler production

1,400 som 2289 40%
o 1,134 1,147

   

1,200 CAGR :0- 30%
1,000
20%
800
10%
600 1,027
400 0%
200 -10%
- -20%

maby Boaudii6n®s whecldrs-cdrgdCo00g) *° emia Mtoduction -3 wheelers-passenger (ods)

Production -3 wheelers-total ('000s) —m% growth y-o-y

Source: CRISIL Research

Cars and UVs

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 the 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 is 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.

Projected growth in cars and UV production

5,000 10% 15%
7% .
4,000 4% 6% vee 10%
2 5%
3,000 0%
2,000 5%
-10%
1,000 Asc
“ -20%
FYI5 FY16 FY17 FY18 FY19 FY20 FY24P

mmm Production - Cars and UVs (000s) —#—% growth y-o-y

Source: CRISIL Research

After a sharp decline in fiscals 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 in cost of ownership is likely to be
moderate, because of lower interest rates and increased fuel efficiency. Large-car sales are expected to decline by
10-12% CAGR in fiscal 2020-2024 because the UV segment is expected to continue cannibalizing the large-car
segment and put pressure on its growth. Post a 7-9% decline in fiscal 2021, UV and van sales will clock a faster
7-9% CAGR during fiscal 2020-2024, driven by a continued shift in consumer preferences and multiple model
launches by manufacturers in this segment. The entry of new players in the UV segment is also expected to aid
traction. Replacement demand is also likely to rise, as car owners opt for newer models due to higher affordability,

160
