India’s passenger car sales are expected to grow at a moderate pace of 4-7 percent in the fiscal year 2025-26, according to a report by Indian rating agency ICRA on Friday, February 28.
Two-wheeler sales growth would be in range of 6-9 percent, lower than the estimated sales growth of 11-14 percent in 2024-25, the report said.
The ratings agency highlighted that healthy retail sales of passenger vehicles have helped moderate dealer inventory levels in recent months, although inventory remains moderately high.
“The industry’s growth in 2024-25 is expected to be in the range of 0-2 percent. Given that key demand drivers such as disposable incomes, new model launches, and the cost of ownership remain either neutral or favorable, ICRA estimates a moderate growth of 4-7 percent in PV sales for FY 2026,” the report said.
Regarding the domestic commercial vehicle (CV) sector, it said it expected marginal growth in 2025-26.
Economic improvements, continued infrastructure spending, freight availability, and regulations such as the scrappage policy are expected to drive replacement demand. While demand for buses is anticipated to grow due to mandatory scrapping of older government vehicles, demand for light commercial vehicles (LCVs) may be impacted by competition from electric three-wheelers (e3Ws) and a slowdown in e-commerce.
Hence, medium and heavy commercial vehicles (M&HCVs), LCVs, and buses are projected to grow by 0-3 percent, 3-5 percent and 8-10 percent, respectively, in 2025-26, ICRA said.
