According to a report by the Indian rating agency ICRA published on Wednesday, February 18, car sales in India will return to growth in fiscal year 2026-27 at 3.6 percent after a period of rapid growth seen by the end of fiscal year 2025-26 amid lower rates of goods and services Tax (GST).
Sales growth here means shipments from manufacturers to dealers.
Giving a detailed forecast of sales growth by category, ICRA stated that passenger vehicle (PV) volumes are estimated to grow by 4-6 percent year-on-year in 2026-27, driven by sustained demand dynamics. At the same time, sales of two-wheeled vehicles are likely to increase by 3-5 percent as growth slows on an improved basis. Commercial vehicle (CV) volumes are expected to continue to be driven by economic activity and healthy prospects in the bus segment, leading to overall segment growth of 4-6 percent.
"The current fiscal year 2025-26 has developed as a story of two halves for the Indian automotive industry, with muted demand in the first half and a strong recovery in the second half amid political support and healthy demand in rural areas. Sales volumes in the industry have been strong over the past few months, helped by lower tax rates on goods and services, pent-up demand, support for rural production, and a favorable financial environment. Although demand sentiment remains optimistic, volumes are reaching levels that will affect potential.
