Passenger vehicle sales in India are expected to grow by around 10 percent in 2026, extending the recent momentum seen after GST rate cuts, with sport utility vehicles continuing to lead demand. The outlook was shared by Shailesh Chandra, Managing Director and Chief Executive Officer of Tata Motors Passenger Vehicles, as the company steps up its product expansion strategy for the year ahead.
Industry Growth Gathers Pace After GST Reforms
According to Chandra, the passenger vehicle industry witnessed a decline during the first eight months of 2025. However, growth picked up sharply after GST reforms, with sales rising more than 20 percent in the months that followed. December recorded strong volumes, and early indicators for January also remain positive.He noted that even if growth moderates slightly, the industry has the capacity to sustain double-digit expansion, hovering around 10 percent with a small margin on either side, supported by improving demand trends.
Tata Motors Aims for Industry-Beating Growth in 2026
Commenting on Tata Motors Passenger Vehicles’ own outlook, Chandra said the company is entering an intense product launch phase and expects to outperform overall industry growth during the calendar year.Supplies are scheduled to begin this month for at least three products, including the updated Tata Punch, the Sierra, and petrol variants of the Safari and Harrier. In addition, several new launches are lined up through the year, which are expected to strengthen the company’s sales momentum.
Chandra added that Tata Motors Passenger Vehicles closed 2025 on a strong note, having ranked number two in the VAHAN sales data during the third quarter of the financial year.
SUVs Continue to Outperform Passenger Cars
On broader market trends, Chandra said SUVs have continued to grow faster than cars following GST 2.0. Multiple SUV sub-segments are contributing to this expansion, including mid-size SUVs, compact SUVs, and sub-compact SUVs.He pointed out that all three segments are performing well and have collectively driven growth in the passenger vehicle market. The sub-compact SUV segment, where Punch operates, is expected to see further acceleration.
Sub-Compact SUV Segment Expands Rapidly
The sub-compact SUV category has emerged as one of the biggest beneficiaries of GST 2.0, supported by a price reduction of around 10 percent following the tax cut. This has led to a sharp recovery in demand, with Punch sales rising nearly 70 to 80 percent after the reforms.Before the GST reduction, the entry-level and sub-compact segments were declining at a faster pace than the overall industry. The turnaround has been significant, with the segment’s cumulative monthly sales now estimated at around 40,000 units.
Chandra said the segment has steadily expanded from around 20,000 units per month to 30,000, and now to 40,000 units, and continues to offer room for further growth.
New Punch Expected to Strengthen Market Position
With the updated Punch offering a stronger value proposition, enhanced freshness, and additional powertrain options, Chandra expressed confidence that the model will improve Tata Motors’ sales performance while also expanding the overall sub-compact SUV market.He added that the continued shift in consumer preference towards SUVs is likely to support sustained growth for both the segment and the broader passenger vehicle industry in the coming year.
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