New Delhi: India’s passenger vehicle industry is expected to maintain healthy growth momentum in FY27, supported by strong consumer demand, favourable tax measures, and the popularity of newly launched models, according to a report by ICRA released on Friday.
The report stated that passenger vehicle volumes are likely to grow by 4.6 per cent in FY27. However, the projected growth rate is slightly moderated due to the high base effect from FY26 and concerns surrounding a weak monsoon outlook.
According to ICRA, the passenger vehicle segment witnessed strong wholesale and retail demand in April, driven by GST rate cuts, the extended summer wedding season, and positive customer response to newly launched vehicles. Despite global concerns such as the ongoing West Asia crisis, demand in the domestic market remained resilient.
Wholesale passenger vehicle volumes rose by 25 per cent year-on-year to around 4.4 lakh units in April. The report noted that automobile manufacturers continued stable production to meet strong domestic demand. On a month-on-month basis, wholesale dispatches remained largely unchanged.
Retail sales also recorded healthy growth, increasing by 16 per cent compared to the same period last year. ICRA attributed this rise to sustained demand for new models, festive and wedding season purchases, and the continued benefits of revised GST rates.
However, retail sales saw a sequential decline from March 2026 levels, mainly because dealerships had offered higher discounts during the financial year-end period to push sales volumes.
The report further highlighted a significant improvement in inventory levels. As per data from the Federation of Automobile Dealers Associations (FADA), inventory levels dropped to around 28–30 days in April 2026, compared to 50 days in April 2025 and nearly 60 days in September 2025. The decline was supported by stronger retail demand and better inventory management by dealers.
ICRA also observed a positive trend in exports. Passenger vehicle export volumes increased by 13 per cent in April on a sequential basis, reflecting stronger global supply efforts by Indian automobile manufacturers.
The agency expects overall wholesale passenger vehicle growth to remain in the range of 4–6 per cent during FY27.
With inputs from IANS