India’s vehicle finance market is seeing more segmented growth, with commercial vehicles and used cars emerging as key drivers, according to CRIF High Mark’s latest research report, Wheels and Ambition: A Research Report on India’s Vehicle Finance Landscape. The report examines trends across auto, two-wheeler, commercial vehicle and used-car financing, including borrower behaviour, originations and portfolio risk.
Commercial vehicle loans recorded a 20.1 per cent five-year CAGR between June 2021 and June 2026, while used-car loans grew at a 26.2 per cent CAGR over the same period. The used-car borrower base expanded 2.4 times, indicating increased formalisation of the segment.
Overall vehicle-finance originations grew 17.1 per cent year on year in Q1 FY27, supported by higher ticket sizes and volume growth across segments. Average auto-loan ticket size increased to ₹8.6 lakh, while 75 per cent of used-car financing originations came from new-to-product borrowers.
Commercial Vehicle, Used-Car Loans See Strong Growth
Commercial vehicle loans recorded a 20.1 per cent five-year CAGR from June 2021 to June 2026. Used-car loans grew faster, at 26.2 per cent over the same period, making it the fastest-growing segment in the report.
The report also identifies commercial vehicles as a segment with macro-driven growth potential, while used cars are described as a scalable opportunity within vehicle finance.
Two-Wheeler Finance Continues to Add Borrowers
Two-wheeler financing remains the largest borrower segment. Its borrower base increased from approximately 2.3 crore in June 2021 to 3.6 crore in June 2026. The segment also continued to attract new borrowers, with 80 per cent classified as new-to-product borrowers.
Auto Loans Shift Towards Higher-Value Financing
Auto loans are showing signs of a premium-led recovery, with average exposure per borrower increasing at a 9.2 per cent CAGR between June 2021 and June 2026.
The share of auto loans above ₹15 lakh increased from 27.6 per cent in Q1 FY25 to 29.8 per cent in Q1 FY27. The average auto-loan ticket size stood at ₹8.6 lakh in Q1 FY27.
Vehicle Finance Asset Quality Shows Stabilisation
CRIF High Mark said the overall risk environment is stabilising, with later-stage delinquency improving across vehicle-finance segments. Auto loans recorded the strongest asset quality, while commercial vehicle loans continued to have comparatively higher early-stage delinquency.
The report also noted an increase in borrowers holding multiple active loans in some segments. In commercial vehicle loans, the share of borrowers with two or more active loans increased from 15.7 per cent in June 2021 to 19.9 per cent in June 2026.
Vehicle Finance Expands Beyond Major Urban Centres
Vehicle-finance originations are seeing increased penetration across BT100 geographies, indicating growing demand beyond major urban centres. Two-wheeler loans had a 53 per cent BT100 share, while commercial vehicle loans recorded a 45 per cent share.
The report points to a shift from a predominantly volume-led vehicle-finance market towards a more segmented growth market, with commercial vehicles, used cars, premium auto and two-wheelers contributing to different areas of growth.