India’s passenger vehicle industry volumes to expand by 4.6 pc in FY27

New Delhi, May 22: The Indian passenger vehicle segment has witnessed strong volume growth driven by GST rate cuts, the extended summer wedding season, and healthy demand for newly launched models, despite concerns over a weak monsoon outlook and the ongoing West Asia crisis, a report showed on Friday.

ICRA expects passenger vehicle industry volumes to expand by 4.6 per cent in FY27, led by the likelihood of sustained demand momentum. The moderation in growth considers the elevated base of FY26 and the weak monsoon outlook. Wholesale and retail volumes of passenger vehicles grew at a strong pace in April on a YoY basis, with demand continuing to be supported by GST rate cuts, the extended summer wedding season and healthy demand for newly launched models. According to ICRA, wholesale volumes of passenger vehicles rose by 25 per cent year-on-year to 4.4 lakh units in April, as original equipment manufacturers (OEMs) continued steady production to cater to the robust domestic demand. On a sequential basis, wholesale dispatches remained steady.

Retail sales recorded a strong YoY growth of 16 per cent in April, supported by the steady traction of newly launched models, extended summer wedding season and the sustained positive impact of the revised Goods and Services Tax (GST) rates. The retail volumes reduced on a sequential basis from March 2026, impacted by higher discounts to boost year-end volumes, said the report.

ICRA further stated that inventory levels remained low at 28-30 days in April 2026 from 50 days in April 2025 and 60 days as of September 2025, as per the Federation of Automobile Dealers Association (FADA), aided by stronger retail offerings. As per ICRA’s assessment, export volumes of passenger vehicles rose by a healthy 13 per cent in April on a sequential basis. “The growth indicates the increasing supply push from Indian OEMs,” the report said. ICRA expects wholesale volume growth of 4-6 per cent in FY27.