Motown’s 2025 growth hinges on rural demand
Subscribe to enjoy similar stories. As urban consumption witnesses a slowdown, the auto industry's fortunes in 2025 rest squarely on rural demand. With healthy kharif and rabi crop outputs, improved minimum support prices from the government, and better terms of trade for farmers, rural markets could provide the much-needed boost for two-wheelers and tractors in the coming year.
This rural demand is poised to be the primary growth engine for the auto industry, as passenger vehicle (PV) and commercial vehicle (CV) demand remains uneven. While PV sales hinge on the success of upcoming sports utility vehicle (SUV) launches early next year, CV manufacturers are counting on a revival in government spending to reignite demand. Read this | Mint Primer: Why car sales have hit a festive speed-breaker “We prefer two-wheeler and tractor companies as rural sentiment is getting better.
We expect domestic two-wheeler and tractor industries to post 10% and 7% volume growth in FY25 respectively," Raghunandhan NL, director, equity research, Nuvama Institutional Equities, told Mint. Although tractor sales fell 3.29% year-on-year between April and November this year, there was significant 26% surge in sales last month, according to the Federation of Automobile Dealers Associations (FADA). This signals a potential revival.
“A good monsoon season and increased water reservoir levels point towards better rabi crop output in FY25. We are expecting tractor demand to be better in H2 than in H1(FY25)," Arun Agarwal, auto analyst at Kotak Securities told Mint. Read this | Is there more steam left in the passenger vehicle segment? The market leader in tractor manufacturing, Mahindra and Mahindra Ltd (M&M) is best placed amongst all major original
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