PV segment to grow bt double-digit.

PV segment is expected to grow by double digits, challenges related to semi-conductor shortages needs to be addressed. CV segment is expected to report steady growth of 7-8%, while 2W segment should grow in double-digit YoY, mainly driven by EVs.Within 3W segment, EVs account for more than 50% and are witnessing a shift towards more organized players. EV initiatives, ruralrecovery, inventory management and chip shortages are key monitorable for investors in FY24. The interaction gives us confidence on sustained growth of automotive industry in FY24. We continue to remain positive on PV industry, premium 2Ws and expect CV upcycle to continue over the medium term. Our top picks in the sector are Maruti Suzuki and Eicher Motors who will benefit from industry tailwinds and company specific factors like market share gains from new products, premiumisation trends, etc. Segment-wise takeaways: PV and CV to lead growth Passenger Vehicles (PV): The PV segment is expected to see double-digit growth (10% if significant impact from chip-shortage and upto 20% if no impact from chip�shortage), despite challenges posed by the semi-conductor shortage. SUVs are now preferred by consumers, and there is a higher demand for advanced features in vehicles. There may be reduced number of vehicle launches and higher focus on meeting the bookings which should lead to significant capacity expansion in the industry. Bookings have seen a decline since mid-March. We see the SUV segment continue to outperform with launch of new models and easing supply chain issues.

Two-Wheelers (2W): 2W segment is expected to show 10-12% YoY growth, although it will still below pre-Covid levels. Growth will primarily be driven by EVs, while 100cc segment may see marginal growth due to rural demand and new model launches. Premium 2Ws should see normal growth (5-7%) in FY24. We expect EV 2W to outgrow the industry although cut in the FAME subsidy could have negative impact in the short term. Premiumisation trend should continue in the segment. Commercial Vehicles (CV): CV segment is performing well with steady growth led by last mile connectivity, government spending on infrastructure and improvement in the economy. However, growth is not expected to be significant. We expect M&HCV segment to outgrow LCVs besides CV upcycle will continue over next two years, although the pace of growth may moderate. Three-Wheelers (3W): More than 50% of 3W vehicles have transitioned to electric, who are seeing a shift from e-rickshaws to e-autos and more towards organized players said Vinkesh Gulati, Chairman Research & Academy at Federation of Automobile Dealers Associations and is the Managing Partner of United Automobiles.