Synopsis
Passenger vehicle sales in India are anticipated to grow by 4-7% in 2025-26, with two-wheelers expected to perform even better. The report also highlights a positive outlook for the commercial vehicle sector, driven by various favorable economic factors.Key Takeaways
- Passenger vehicle sales projected to grow by 4-7%.
- Two-wheeler sales expected to rise 6-9%.
- Strong rural demand supports growth.
- Disposable income increase due to tax exemptions.
- Commercial vehicle sector also likely to grow.
New Delhi, Feb 28 (NationPress) Passenger vehicle sales in India are projected to achieve a growth rate of 4-7 percent in 2025-26, with the majority of demand drivers remaining neutral or positive, according to a recent analysis.
The two-wheeler sales are anticipated to experience a more robust growth of 6-9 percent in FY26, driven by strong rural demand, following a predicted 11-14 percent growth in FY25, as reported by ratings agency ICRA.
In FY24, passenger vehicle industry volumes reached a record high of 4.2 million units. Year-to-date (YTD) FY25, wholesale volumes remained consistent due to stable production by automotive manufacturers, although industry growth has been modest at around 2 percent, according to the report.
ICRA noted, "Most of the demand drivers for the industry -- disposable incomes, new model launches, and cost of ownership -- remain neutral or favorable. Consequently, despite a high base for the industry, ICRA estimates PV industry volumes to grow at a moderate rate of 4-7 percent in FY2026."
In the two-wheeler (2W) sector, ICRA reported a strong year-on-year growth of approximately 10 percent in YTD FY2025, as the industry continues to recover from lower levels experienced during FY2020-FY2022.
The industry's outlook has been bolstered by improved rural demand following a favorable monsoon. The report highlights that rural demand is expected to remain robust, aided by strong rabi sowing to date.
A decrease in income tax due to exemptions in the Union Budget is predicted to enhance disposable income and stimulate demand. ICRA forecasts the two-wheeler industry to grow at a vigorous pace of 6-9 percent in FY2026, following an estimated 11-14 percent growth in FY2025.
The analysis also anticipates that the domestic commercial vehicle (CV) sector will see growth in FY26. Factors such as enhanced economic activities, ongoing budgetary support for infrastructure spending, and healthy freight availability, along with regulations like the scrappage policy and the push for cleaner vehicles, are expected to boost replacement demand, according to ICRA.
"The mandatory scrapping of older government vehicles and replacement demand will foster growth in buses, while LCV (trucks) growth is expected to be subdued due to competition from e3Ws and a slowdown in e-commerce, among other factors. The growth rates for M&HCV (trucks), LCVs, and buses are projected at 0-3 percent, 3-5 percent, and 8-10 percent respectively in FY2026," the report concluded.
