After three years of slowdown, automobile companies in India experienced a sharp growth across all segments last year.

But they may not have too much to cheer over the next 4-5 years going by the latest forecast on the sector by Frost & Sullivan.

As per its latest study on the sector, against a 7 per cent growth clocked by the passenger car segment last year, F&S has projected a compound annual growth rate of 5.8 per cent for the segment till 2008.

The medium and heavy commercial vehicles segment, which reported a 27.6 per cent growth last year, is expected to clock a CAGR of merely 8.7 per cent during the period. Multi-utility vehicles and LCVs are expected to record a CAGR of 8.7 per cent and 11.3 per cent, respectively.

Last year, while the MUV segment reported an annual growth of 7.5 per cent, the LCV sector registered a 27 per cent growth.

The two-wheeler segment, with a domestic user base of 33 million, comprising motorcycles, scooters and mopeds, is expected to grow at a CAGR of 11.2 per cent over the six-year period with motorcycles being the fastest growing segment at a CAGR of 12.7 per cent.

While motorcycles clocked a 30.2 per cent growth last year, the scooters and mopeds segment reported a decline in growth of 7.6 per cent and 16.7 per cent, respectively.

The Indian market for two-wheelers is second only to China. On the other hand, the domestic tractors market, the largest in the world, is poised to record a CAGR of 4 per cent over the six-year period.

The sector witnessed a 22 per cent decline in growth last year. The three-wheeler segment, which reported a growth of 24.9 per cent last fiscal, is expected to report a growth close to 10.3 per cent driven by the need to transfer smaller loads within urban areas.

The growth in the passenger cars segment, according to the study, would be led by demand drivers in the form of a cut in excise duty, new model launches, higher disposable income and changing consumer mindset.

In the long-term, F&S expects a three-tier structure developing in the truck market as in the case of developing countries with the first tier consisting of long haul trucks run on the highways, second tier with medium and light commercial vehicles and the third tier comprising vehicles delivering goods to rural areas.

Street signs

• The medium and heavy commercial vehicles segment is expected to clock a CAGR of merely 8.7 per cent during the period.
• Multi-utility vehicles and LCVs are expected to record a CAGR of 8.7 per cent and 11.3 per cent, respectively.
• While motorcycles clocked a 30.2 per cent growth last year, the scooters and mopeds segment reported a decline in growth of 7.6 per cent and 16.7 per cent, respectively.