Will PV Sales Increase by 1–4% in FY26? Insights from ICRA
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Synopsis
As India gears up for FY2026, the commercial and passenger vehicle sectors are set for moderate growth. With GST reductions on the horizon, the ICRA report highlights key trends and expectations that could reshape the automotive landscape. Discover what this means for buyers and the industry at large.
Key Takeaways
- Commercial vehicle and passenger vehicle segments show cautious optimism for FY2026.
- ICRA projects a growth rate of 1 to 4 percent for passenger vehicles.
- GST rate reductions influence purchasing decisions among fleet operators.
- LCV retail sales increased by 8.2 percent in August.
- M&HCV sales demonstrate strong growth despite demand challenges.
New Delhi, Sep 28 (NationPress) India's commercial vehicle and passenger vehicle sectors are projected to experience a cautiously optimistic trend in FY2026, with moderate growth anticipated in both areas due to recent GST rate reductions, according to a report released on Sunday.
In August, wholesale volumes for commercial vehicles rose by 6% year-on-year (YoY), while retail sales saw a 3.2% increase, as highlighted in a report by the ratings agency ICRA.
This moderate growth is attributed to the purchasing deferment by fleet operators, who are awaiting GST reductions. As a result, there was a modest 1.3% increase in wholesale volumes during the initial five months of FY2026.
ICRA anticipates a 1 to 4 percent rise in passenger vehicle volumes for FY2026, spurred by new model launches and favorable policy changes.
Retail sales of light commercial vehicles surged by 8.2% in August, with a 0.8% sequential growth. Nonetheless, challenges remain in the LCV truck segment, due to a growing preference for pre-owned vehicles and competition from electric three-wheelers, the report stated.
Sales of medium and heavy commercial vehicles (M&HCV) saw a strong 9.2% YoY growth, despite recent demand challenges due to prolonged monsoon conditions.
The bus segment is expected to grow by 8 to 10 percent, driven by replacement demand.
Passenger vehicle sales saw a decline in August compared to both the previous month and the same period last year, as consumers postponed purchases in anticipation of potential GST reductions, according to the report.
However, passenger vehicle exports soared by 25 percent in August and 15 percent over the first five months of the fiscal year.
SUVs continued to dominate the market, accounting for 65 to 66 percent of total passenger vehicle sales.
ICRA noted that the overall economic climate, a revival in construction and mining, along with ongoing festive season demand, is likely to bolster sales across various automobile segments.
Point of View
I believe the automotive industry is entering a pivotal phase. The cautious optimism surrounding FY2026 is backed by solid data and promising trends. It's crucial for consumers and industry stakeholders to stay informed and adapt to the changing landscape. Our commitment is to provide accurate and relevant information that empowers our audience.
NationPress
28/09/2025
Frequently Asked Questions
What is the expected growth rate for passenger vehicle sales in FY2026?
ICRA forecasts a growth rate of 1 to 4 percent for passenger vehicle sales in FY2026, driven by new model launches and policy relief.
How did GST rate reductions impact vehicle sales?
The anticipated GST rate reductions have led to a cautious approach among fleet operators, causing some to defer purchases, which in turn influenced sales trends.
What trends are affecting the light commercial vehicle (LCV) market?
Despite a rise in retail sales for LCVs, challenges remain due to increasing demand for pre-owned vehicles and competition from electric three-wheelers.
What are the projections for the bus segment in FY2026?
The bus segment is expected to experience growth in the range of 8 to 10 percent, largely due to replacement demand.
How are passenger vehicle exports performing?
Passenger vehicle exports have seen significant growth, increasing by 25 percent in August and 15 percent in the first five months of the fiscal year.
