Auto industry set for slower growth in FY27
image for illustrative purpose
New Delhi: India’s automobile sector growth is likely to moderate in FY27 after a strong, policy led expansion in FY26, with demand having benefited from GST cuts, improved affordability and resilient economic activity, a report said on Friday.
The report from ICRA said GST changes primarily drove the demand, by improving affordability in two wheelers and enhancing fleet economics in commercial vehicles.
The commercial vehicle segment led the upcycle aided by GST rate cuts, higher freight movement and infrastructure activity, it said.
The ratings agency noted commercial vehicle wholesale volumes rose 23.8 per cent year on year in February 2026, while domestic wholesale volumes grew 12.5 per cent in the first 11 months of FY26.
Retail volumes remained robust, increasing 28.9 per cent YoY in the previous month, with medium and heavy commercial vehicles seeing strong growth. Light commercial vehicles (LCVs) continued to benefit from improved last-mile freight activity and higher sensitivity to GST-led cost reductions.
It predicted the segment to exceed its earlier growth estimates of 7-9 per cent for FY26, before moderating to 4-6 per cent growth in FY2027.
