India saw a 16% year-on-year increase in passenger vehicle wholesale volumes to 4.4 lakh units in March 2026, with a sequential improvement of 6%. Original equipment manufacturers maintained steady production to meet robust domestic demand, as per a report. The report by ICRA forecasts a 4-6% growth in automobile wholesale volume for FY27, supported by GST rate cuts and new model launches. Despite an 8.6% growth in FY2026, the elevated FY2026 base and weak monsoon outlook have had some impact.
Retail sales in March recorded a strong 21% year-on-year growth, driven by new model launches and the positive impact of revised GST rates. Wholesale volumes saw a 0.2% decline in H1 FY2026 but surged by 17% in H2 FY2026 post the GST rate change. Retail volumes hit an all-time high of 4.6 million units, marking an 11% increase.
According to the report, inventory levels, as per data from the Federation of Automobile Dealers Association (FADA), reduced to around 28 days by March 2026 from 52-53 days in March 2025 and 60 days in September 2025, supported by strong retail sales. Utility vehicles (UVs) dominated 68% of the overall passenger vehicle volumes in FY26, with mini, compact, and super-compact segments showing recovery post GST rate cuts. The UV segment is expected to continue driving volumes, alongside a rise in demand for passenger cars.
Export volumes in FY2026 grew by a healthy 18%, signaling increased supply from Indian OEMs. The report highlights a positive trend in export growth, despite starting from a relatively moderate base.
