Passenger vehicle volume in India to grow around 4 pc in FY26, SUV demand surges
New Delhi, Nov 19
India's passenger vehicle industry volumes are expected to grow around 4 per cent in FY26, driven by GST rationalisation, easing inflation and supportive fiscal measures, a report said on Wednesday.
SUVs are expected to continue dominating the market and grow 8–10 per cent, according to the report from CareEdge Ratings.
The rating agency said the GST cut on small cars from 28 per cent to 18 per cent should revive entry‑level demand, and the removal of cess on SUVs can boost their demand.
The hybrid volumes are expected to jump 34-38 per cent to about 1.07–1.10 lakh units in FY26, up from 80,406 units registered in FY25.
EV penetration is expected to remain modest at 3-4 per cent, the report said, forecasting electric car volumes in the PV segment at around 1.75 lakh units for FY26. EV sales grew by 83 per cent in FY24 and 11 per cent in FY25, reaching 1.11 lakh units in FY25.
Madhusudhan Goswami, Assistant Director, CareEdge Ratings, said that after the GST rate cut, robust growth in retail sales was observed across rural and urban markets.
"Going forward, with the end of festival season, PV sales are expected to normalise; however, growth momentum is expected to sustain due to the upcoming harvest season boosting rural demand along with seasonal demand from weddings,†Goswami added.
PV industry growth in FY25 moderated to 3.7 per cent in FY25 due to the levelling off of pent-up demand, higher vehicle prices, and the high base effect of previous years. Despite these challenges, new model launches and strong SUV demand sustained overall momentum.
The pace of growth of the industry will depend on OEM pricing strategies, product refresh cycles, and sustained improvement in macroeconomic conditions, the report noted.
— IANS
Reader Comments
SUV craze continues! But I'm concerned about our cities' infrastructure. Where will all these big vehicles park? Traffic is already a nightmare in Mumbai. We need better urban planning alongside vehicle growth.
Hybrid vehicles growing 34-38% is impressive! This is the perfect bridge technology until EV infrastructure improves. Better than pure petrol and more practical than EVs for long drives. Smart choice by Indian consumers.
EV penetration at only 3-4% seems quite low given the government's push. Charging infrastructure remains the biggest hurdle. Unless we see more charging stations, this number won't improve significantly.
Rural demand picking up during harvest season makes perfect sense. In our village, many farmers buy vehicles after good crop yields. This seasonal pattern has been consistent for years. Good to see the report acknowledges this.
While the growth numbers look positive, I hope manufacturers focus on quality and safety too. Indian roads need vehicles that can handle our conditions safely. Price shouldn't be the only consideration.
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