moderate, because of lower interest rates and increase in fuel efficiency. Large-car sales are expected to decline
by 10-12% CAGR in fiscal 2020-24 because the UV segment is expected to continue cannibalize the large-car
segment and put pressure on its growth. Post 7-9% decline in fiscal 2021, UV and van sales will grow faster at 7-
9% CAGR during the period fiscal 2020-24, 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, competitively priced launches, and easy availability of finance. Overall, the cars and UV segment
are expected to sustain growth at 5-7% CAGR during fiscal 2020 to 2024 post consecutive two years of double-
digit decline.

Two wheelers

Rural markets to steer long-term growth

CRISIL Research expects domestic two-wheeler sales to record a compound annual growth rate (CAGR) of 1-3%
from fiscal 2020 to fiscal 2024 because of a low base of 2021. However, need for personal mobility has provided
cushion to two-wheeler industry. The two-wheeler industry recorded a 2% CAGR from fiscal 2015 to fiscal 2020.
In the near term, CRISIL Research expect the two-wheeler industry to be negatively impacted by the disruption
caused by COVID-19, high inventory levels and high cost of ownership owing to BS VI emission norms resulting
in higher vehicles prices in fiscal 2021.

Two-wheeler domestic sales outlook FY 2020- FY 2024

  

FY18 FY19 FY20 FY21E FY24P.

=Motorcycles =Scooters =Mopeds Total

Source: Society of Indian Automobile Manufacturers, CRISIL Research

Exports to decline in fiscal 2021 and then improve in fiscal 2022

In fiscal 2021, CRISIL Research projects export demand to decline by 15-20% as economies are grappling with
COVID-19 leading to weak demand and trade restrictions. Two wheelers exports to top 20 COVID-19 affected
nations account for ~30% of the total exports. However, major markets in Asia and Africa are likely to be impacted
by trade disruptions and plummeting crude oil prices. Going ahead, exports are expected to recover in fiscal 2022
as CRISIL Research expect the impact of COVID-19 to dissipate with availability of vaccines / medicines and
development of herd immunity. In fiscal 2022, CRISIL Research expect the two-wheeler exports to grow at a rate
of 8-13%.

Tractors
Domestic demand to grow 4-6% in a long run

Domestic tractor sales are expected to grow 18-20% on-year in fiscal 2021 due to better crop production on
account of a normal monsoon.

CRISIL Research projects domestic tractor sales to expand at 4-6% compound annual growth rate (CAGR) during
fiscals 2020 to 2024, on account of low tractor penetration in India (3 tractors per 100-hectare area); government's
focus on improving farm incomes through various schemes, promoting farm mechanization; and investments to
improve rural infrastructure. The projected growth rate factors in one-two years of deficient rainfall.

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