India`s passenger vehicle sales to grow 1–4 pc in FY26
India’s commercial vehicle and passenger vehicle segments get a cautiously optimistic outlook for FY2026, with moderate growth expected in both segments amidst GST rate reductions, a report said on Sunday.
In August, wholesale volumes of commercial vehicles increased by 6 per cent year-on-year (YoY), while retail volumes rose by 3.2 per cent, a report from ratings agency ICRA said.
The moderate growth was because of purchase deferment among fleet operators in anticipation of GST reductions. This also resulted in a modest 1.3 per cent increase in wholesale volumes for the first five months of FY2026.
ICRA forecasted a 1 to 4 per cent increase in passenger vehicle volumes for FY2026, driven by new model launches and policy relief.
Light commercial vehicle retail sales increased by 8.2 per cent in August and 0.8 per cent growth sequentially. Despite the growth, headwinds in the LCV truck segment persist due to the rising preference for pre-owned vehicles and competition from electric three-wheelers, the report said.
The medium and heavy commercial vehicle (M&HCV) sales saw a robust 9.2 per cent YoY increase, despite recent demand dampening by prolonged monsoons.
The bus segment is projected to grow by 8 to 10 per cent, buoyed by replacement demand.
Passenger vehicle sales declined in August compared to both the previous month and the same period last year, as buyers postponed purchases in anticipation of potential GST reductions, the report said.
Passenger vehicle exports increased by 25 per cent in August and 15 per cent in the first five months of the fiscal year.
SUVs maintained their dominance, representing 65 t0 66 per cent of overall passenger vehicles volume.
ICRA said that the overall economic environment, a resurgence in construction and mining, and continued festive season demand are expected to support sales across automobile segments.
