ICRA Sees Passenger Vehicle Wholesale Growth Moderating to 4-6% in FY2027 After 7-8% Rise in FY2026

ICRA projected in its March 2026 report that India's passenger vehicle (PV) industry will see wholesale volume growth moderate to 4-6% in FY2027, after recording 7.8% year-on-year wholesale growth in the first 11 months of FY2026, with the elevated FY2026 base and risks from the West Asia conflict identified as key factors that could constrain growth.

Retail sales grew 9.5% in the April 2025–February 2026 period, supported by a record festive season, the sustained pass-through of GST rate cuts on passenger vehicles, and new model launches by original equipment manufacturers (OEMs) in the fourth quarter. Dealer inventory levels declined to 27-29 days by end-February 2026, according to data from the Federation of Automotive Dealers Association (FADA).

The utility vehicle segment continued to dominate the industry, accounting for 67% of overall sales in the first 11 months of FY2026, driven by a shift in buyer preferences and new launches. The entry-level car segment showed a partial recovery following GST reductions, with volumes picking up in the second half of FY2026. Penetration of CNG and electric vehicles continued to rise, aided by new model introductions and an expanding fuel and charging network.

ICRA estimated OEM capital expenditure to remain elevated at ₹250-300 billion per annum — approximately 5-6% of revenues — over the next few fiscals, directed largely at new product development and EV platform investments. The credit profiles of PV OEMs were assessed as likely to remain healthy, supported by improved profitability, low leverage, and adequate liquidity.