CRISIL analysis: Automobile sector faces mixed fortunes amid rural revival

Rural demand had been subdued in the past few financial years owing to low farm profitability because of erratic monsoon and the outsized impact of the pandemic on rural incomes

Just two years ago, automobiles were one of the better-performing sectors, having quickly got back on its feet after the pandemic to post record sales. Barring two-wheelers, all the segments recovered to near pre-Covid sales in FY23 and FY24.

 

In FY25, automobile sales seem to have hit a speed bump, with the passenger vehicle (PV) segment losing momentum and a decline in government spending affecting commercial vehicle (CV) sales, among other factors. Interestingly, though, the two-wheeler and tractor segments, which depend on rural demand, are seen driving growth this financial year, clocking a 12-14 per cent and 6-8 per cent