Domestic Passenger Vehicle Sales to Grow 4-7% in FY26: ICRA

Business Business

Posted by BluraAirport-Admin on 2025-02-28 10:54:50 |

Share: Facebook | Twitter | Whatsapp | Linkedin Visits: 72

---

Passenger vehicle (PV) sales in India are expected to grow at a moderate pace of 4-7% in FY26, according to ratings agency ICRA. The PV industry reached an all-time high of 4.2 million units in FY24, but in FY25, growth has been modest at around 2% due to waning replacement demand and high inventory levels. Despite this, steady retail demand has helped stabilize dealer inventories. ICRA noted that most demand drivers, such as disposable incomes, new model launches, and cost of ownership, remain neutral or favorable, supporting continued growth in the coming years.  

The two-wheeler (2W) industry has seen strong growth in FY25, with volumes increasing by about 10% year-on-year as the sector continues to recover from the downturn it experienced between FY20 and FY22. Improved rural demand, supported by good monsoon conditions and healthy rabi sowing, has contributed to this recovery. Additionally, a reduction in income tax following changes in tax slabs in the Union Budget is expected to boost disposable incomes, further supporting demand. ICRA estimates that two-wheeler sales will grow by 6-9% in FY26, following an estimated 11-14% increase in FY25.  

For the commercial vehicle (CV) industry, marginal growth is expected in FY26. Economic activity improvements, continued infrastructure spending, and healthy freight availability are expected to drive demand. Additionally, policies such as the vehicle scrappage policy and the push for cleaner vehicles are likely to boost replacement demand. The mandatory scrapping of older government vehicles is expected to drive growth in the bus segment, which is projected to expand by 8-10%. Light commercial vehicles (LCVs) are expected to grow by 3-5%, although this growth may be limited due to the increasing popularity of electric three-wheelers (e3Ws) and a slowdown in e-commerce activity. Meanwhile, medium and heavy commercial vehicles (M&HCVs) are expected to see limited growth in the range of 0-3%. 

Go!