Passenger Vehicle Growth to Moderate to 4-6% in FY27

India’s domestic passenger vehicle (PV) sales growth is expected to moderate to 4–6 per cent in FY27, even as underlying demand remains resilient, according to the latest report by ICRA. The agency noted that the sector is entering a phase of normalisation after a period of relatively elevated growth.

The report said wholesale PV volumes are likely to expand by 5–7 per cent in FY26, supported primarily by improved affordability following GST rate cuts and steady consumer demand. Despite the moderation expected in FY27, the outlook for the broader automotive industry remains stable, backed by rural demand trends and replacement cycles.

ICRA also projected two-wheeler volumes to grow 3–5 per cent year-on-year, while commercial vehicle volumes are expected to rise by 4–6 per cent. However, the entry-level motorcycle segment continues to face pressure due to higher vehicle prices and affordability constraints among price-sensitive buyers.

Also Read: Jharkhand Budget Session Begins Tomorrow With Appeal for Smooth Proceedings

In contrast, the premium motorcycle and scooter segments have shown a sharp recovery, reflecting stronger demand from relatively affluent consumers. The agency said this divergence highlights the ongoing shift in consumer preference toward higher-value products within the two-wheeler market.

Overall, ICRA expects the automotive industry to witness a normalisation in wholesale volume growth in FY27, following robust expansion in the latter half of FY26 that was driven largely by post-GST reform benefits and favourable rural demand sentiment.

Also Read: Education Ministry Unveils AI Transformation Plans at India AI Summit 2026