India's passenger vehicle (PV) and commercial vehicle (CV) industry returned to growth in FY2026 following a slowdown in the previous year, with stronger domestic demand, higher exports and a continued shift towards utility vehicles, according to a new industry report by Rubix Data Sciences.
The report states that domestic passenger vehicle sales rose around 8% year-on-year in FY2026, while commercial vehicle sales increased about 12.5%. It attributes the recovery to the implementation of GST 2.0, which reduced the tax burden on vehicles, and lower RBI repo rates that improved vehicle financing conditions.
PV, CV Production and Sales Rise Over Five Years
India's passenger vehicle production increased from 3.06 million units in FY2021 to 5.54 million units in FY2026, while domestic sales grew from 2.71 million to 4.64 million units over the same period. Commercial vehicle production rose from 0.62 million to 1.17 million units, with sales increasing from 0.57 million to 1.08 million units.
SUVs Now Drive 65% of India's PV Sales
The report also highlights an ongoing shift in consumer preference towards utility vehicles. Their share of passenger vehicle sales climbed from 39% in FY2021 to 65% in FY2025, driven by growing demand for SUVs and crossovers. In the commercial vehicle segment, medium and heavy commercial vehicles expanded their share of sales from 28% to 39%, supported by demand from infrastructure projects, mining and long-haul freight transport.
India's Vehicle Exports Hit Record Highs, Led by Maruti Suzuki
On the export front, passenger vehicle exports reached a record 0.77 million units in FY2025, growing at a 17% CAGR. Saudi Arabia emerged as the largest destination for Indian truck exports, while the UAE led bus exports. Maruti Suzuki recorded exports of 4.47 lakh units during FY2025-26.
ADAS and EV Adoption Rising, but Challenges Remain
The report identifies policy support, including the Production Linked Incentive (PLI) scheme, expanding vehicle financing, growth in the pre-owned vehicle market and replacement demand under the Vehicle Scrappage Policy as key drivers for the sector. It also notes increasing adoption of advanced driver assistance systems (ADAS), with penetration rising from 6.2% in the first half of 2024 to 8.3% in the first half of 2025. Battery electric vehicle penetration in passenger vehicle registrations increased from 1% in 2022 to 4% in 2025, while overall four-wheeler EV penetration reached 5.35% in 2026.
However, the report cautions that the industry continues to face challenges including supply chain disruptions linked to West Asia, higher compliance costs from stricter emission norms, increasing engineering complexity and volatility in raw material prices.