Reports indicate that utility vehicle traction, improved affordability due to GST rate reduction, and sustained demand momentum will propel passenger vehicle sales to a 4- to 6-percent increase this fiscal. According to the report by ratings agency Icra, wholesale volumes of passenger vehicles increased by a robust 27% year-on-year, reaching 4.4 lakh units, while retail sales increased by 33% due to strong consumer demand, newly launched models, and an extended summer wedding season.
But the agency warned that rising commodity and gasoline prices, as well as worries about a weak monsoon, are important variables to keep an eye on.
Utility vehicles maintained their dominance in the segment, making up about 68% of total passenger vehicle sales in FY2026, according to Icra. Mini and compact car demand also showed signs of revival after GST rate cuts in September of last year, the report adds. An expanding supply push by Indian automakers in worldwide markets has contributed to healthy exports, which rose 13 percent annually in May this year.
Also, EV penetration in the passenger car market rose to about 6% in early FY2027, according to the report, indicating that electric vehicle adoption was strong.
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