New Delhi, April 3 – The Indian passenger vehicle industry is estimated to report wholesale volume growth of around 7-9 per cent in FY26, driven by strong festive demand, GST rate cuts, and multiple new model launches, according to a report released on Friday.
The growth is expected to moderate to 4-6 per cent in FY2027, largely due to the high base and evolving macroeconomic conditions, according to credit rating agency ICRA.
The report anticipates a slowdown in growth across India's passenger vehicle (PV) and tractor sectors in FY27, following strong performance in FY26, while maintaining a stable outlook supported by healthy demand drivers and strong credit profiles.
The industry continues to witness structural shifts, with utility vehicles accounting for nearly 67 per cent of overall sales, reflecting sustained premiumization trends. Furthermore, the increasing adoption of alternative powertrains such as CNG and electric vehicles is aiding demand diversification, the report stated.
The tractor industry has witnessed a sharp uptick, with wholesale volumes growing by 22.8 per cent in the 11 months of this fiscal, supported by favorable monsoons, improved agricultural output, and GST reduction on tractors.
Industry volumes are expected to reach an all-time high in FY26. However, growth is likely to moderate to 1-4 per cent in FY2027, given the high base and expected normalization in demand, the report mentioned.
“Despite the anticipated moderation in growth, the credit profiles of original equipment manufacturers (OEMs) in both sectors are expected to remain strong, supported by low leverage, healthy liquidity, and improving operating performance,” it noted.
Passenger vehicle OEMs are expected to continue with significant capital expenditure towards new product development and electric vehicle platforms, while tractor manufacturers are likely to benefit from stable input costs and operating leverage.
Overall, while growth is expected to normalize after a strong FY2026, both sectors are well-positioned to sustain stable performance supported by structural demand drivers and resilient financial profiles, the report noted.
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