ICRA cuts PV factory dispatch outlook down to 0-2% due to high inventory level

Rating agency ICRA on Monday revised downwards the outlook for passenger vehicle factory dispatches to showrooms in the current fiscal on acccount of high inventory levels. Despite good retail sales, a year-on-year growth of 6% in April-October FY2025 partially on account of an early festive season, the high inventory levels for the industry curtailed wholesale volume growth, as per a report on the domestic automotive industry by the domestic ratings agency.

"ICRA has thus revised the outlook for the wholesale volume growth for the industry in FY2025 downwards to 0-2%," it added.

The rating agency had earlier pegged PV wholesale growth at 3-6% for 2024-25 fiscal.

Retail sales of passenger vehicles during the festive season grew at a moderate pace of 6% year-on-year to 6.5 lakh units, aided by attractive discounts and competitive financing rates.

ICRA also revised the outlook for the wholesale volume growth for the industry to 11-14% in FY2025, led by steady replacement demand and an improvement in rural demand on the back of healthy monsoon precipitation.

There was a robust 14% growth in two-wheeler retail sales during the festive season, aided by festive cheer and an improvement in rural demand, it said. Dealers reported a significant increase in footfalls and bookings; as per channel check, enquiries and sales conversions were strong, particularly in semi-urban and rural areas and inventory levels were at near normal levels, it added.

The recently concluded festive season, from October 3, 2024, to November 13, 2024, brought cheer to the automotive industry, with robust retail across most segments (barring commercial vehicles), representing moderate-to-healthy growth on a year-on-year basis.

The sentiments since the onset of the festive period (during Navratri) were strong and the demand was boosted further with a healthy pick-up during Diwali, ICRA noted.