India’s domestic passenger vehicle (PV) volumes are projected to increase by 4–6% in FY27, backed by sustained demand, as per a report by ICRA. Two-wheeler volumes are also expected to grow by 3–5% year-on-year, while commercial vehicle volumes may see a 4–6% rise. Entry-level motorcycle demand faces challenges due to higher prices, but premium motorcycles and scooters are experiencing a strong recovery.
The automotive industry is anticipated to witness a normalization in wholesale volume growth in FY27 after a period of high growth in the second half of FY26. Factors such as post-GST reforms and favorable rural demand sentiments drove the elevated growth. Wholesale PV growth is forecasted to increase by 5–7% in FY26, supported by improved affordability post-GST rate cuts and sustained preference for personal mobility.
Structural trends like premiumization and the increasing share of CNG, hybrids, and electric vehicles are reshaping demand and technology adoption in the automotive sector. Despite favorable demand fundamentals, wholesale PV growth is expected to moderate to 4–6% in FY27 due to a higher base and relatively elevated system-level inventory.
The two-wheeler industry is gradually recovering, with an estimated growth of 6–9% in FY26, supported by healthy agricultural output, improved financing availability, and enhanced affordability. However, growth is likely to normalize to 3–5% in FY27. Srikumar Krishnamurthy, Senior Vice President & Co-Group Head – Corporate Ratings at ICRA, noted that while demand sentiment remains positive, volumes have reached levels that could impact outsized growth potential in FY27.
