India’s Passenger Vehicle (PV) industry closed FY2025-26 at a record high, with domestic sales rising 7.9% year-on-year to 4.64 million units, according to data shared by the Society of Indian Automobile Manufacturers. The milestone caps a year of uneven demand that saw a sharp recovery in the second half, driven largely by sustained appetite for Utility Vehicles (UVs).

Quarterly momentum remained robust, with PV sales climbing 13.2% year-on-year to 1.32 million units in Q4—the highest ever for a January–March period. The growth was overwhelmingly led by UVs, which expanded 20.1% in the quarter and 11% for the full year, underlining a structural shift in consumer preference toward Sport Utility Vehicles (SUVs). In contrast, passenger cars grew a muted 1.9% during FY26, while vans posted a modest 5.5% increase.

SUV surge reshapes PV market; exports at all-time high

According to the auto industry body, the PV segment’s record run was underpinned by a mix of policy support and improving affordability. GST rationalisation, income tax relief, and successive repo rate cuts helped lower ownership costs, boosting demand in the latter half of the fiscal, as per SIAM. PV sales grew 16.7% in H2, reversing a marginal 1.4% decline seen in the first half.

Electric mobility also gained traction, with electric PV registrations rising over 80% during the year. At the same time, exports touched a record 0.91 million units, up 17.5%, supported by steady demand across the Middle East, Africa, and Latin America—highlighting India’s growing relevance as a global manufacturing hub.

Commenting on the full-year performance, Shailesh Chandra said the industry “closed the year on a high note,” with all vehicle segments posting their highest-ever sales in seven years, aided by GST 2.0 reforms and multiple repo rate cuts. He added that domestic demand and macroeconomic fundamentals remain robust heading into FY27, though uncertainties linked to the West Asia conflict could impact fuel prices, supply chains, and overall costs.

March dispatches underline demand resilience across segments

The strong finish to the fiscal was reflected in March dispatches, with PV wholesales rising 16% year-on-year to 0.44 million units, compared to 0.38 million units in the year-ago period. The uptick indicates healthy dealer stocking and stable retail demand despite elevated base levels.

The broader industry also mirrored this resilience. Two-wheeler dispatches rose 19.3% to 19.76 lakh units in March, while three-wheeler sales increased 21.4% to 76,273 units, pointing to a recovery in last-mile mobility and consumption trends.

For the full fiscal, two-wheelers grew 10.7% to 2.17 crore units, commercial vehicles (CVs) rose 12.6% to 10.8 lakh units, and three-wheelers expanded 12.8% to 8.36 lakh units—each segment posting record annual sales, marking the first such across-the-board peak in seven years, as per SIAM.

Commenting on quarterly performance, Rajesh Menon said all vehicle segments recorded their highest-ever sales in a January–March quarter, with double-digit growth across categories, led by passenger vehicles, two-wheelers, and three-wheelers.

Policy tailwinds drive record year; risks remain for FY27

Industry leaders termed FY26 a “landmark year,” driven by structural reforms such as GST 2.0 and lower interest rates, which together strengthened consumer sentiment and demand fundamentals.

Looking ahead, the industry expects growth momentum to sustain into FY27, supported by stable domestic demand and continued product innovation. However, as SIAM President pointed out, "Rising geopolitical uncertainties—particularly in West Asia—pose risks through potential spikes in crude oil prices, supply chain disruptions, and currency volatility, which could weigh on margins and demand."