Passenger Vehicle Wholesale Growth Seen At 4-6% In FY27

Passenger vehicle (PV) wholesale volumes are expected to grow by 4-6% in FY2027, according to ICRA, after recording a 29% year-on-year increase in the first five months of the fiscal. The ratings agency expects growth to moderate because of the high base and recent price increases announced by original equipment manufacturers (OEMs). 

Retail PV sales grew 27% YoY in 5M FY2027, supported by newly launched models, an extended summer wedding season and the continued impact of revised Goods and Services Tax (GST) rates. ICRA noted that the corresponding period in FY2026 had been affected by heightened geopolitical tensions in northern India. 

In August 2026, PV inventory levels increased by five days sequentially to 38-40 days, reflecting pre-festive stocking. However, inventory remained below the 56-day level recorded in August 2025. 

Utility Vehicles Account For 68% Of PV Sales

Utility vehicles (UVs) continued to increase their share of overall passenger vehicle sales, accounting for 68% of industry volumes in 5M FY2027. ICRA attributed the shift to changing customer preferences and new model launches. 

The entry-car segment has also seen some recovery following the GST rate cuts, with volumes increasing from the second half of FY2026. Meanwhile, alternative powertrains, including CNG and electric vehicles, accounted for 34% of overall PV volumes in 5M FY2027, supported by new model introductions and an expanding fuelling and charging network. 

PV OEM Capex Estimated At Rs 250-300 Billion Annually

ICRA expects passenger vehicle OEMs to maintain annual capital expenditure of Rs 250-300 billion, equivalent to around 5-6% of revenues, over the next few fiscal years. The spending is expected to include new product development and investment in electric-vehicle capabilities and platforms. 

The agency also expects operating leverage, cost-control measures and price increases to support OEM margins, which saw around 200 basis points of compression in Q1 FY2027. It expects the credit profile of PV OEMs to remain supported by low leverage, liquidity and strong parentage. 

ICRA said continued model launches and sustained demand during the winter wedding season could support industry volumes. However, a weaker-than-expected monsoon could affect rural sentiment and weigh on volume growth during the second half of FY2027.