India’s PV volume to scale fresh high in FY26, utility cars to lead

New Delhi: India’s passenger vehicle (PV) industry is set to scale a fresh high this fiscal with domestic and export volume cumulatively crossing 5 million units even as the annual growth rate slows to 2-4 per cent, a report showed on Friday. A Crisil Ratings report said that this marks the fourth consecutive year of record sales, although momentum has significantly eased from the 25 per cent surge in fiscal 2023 after the pandemic. According to the report, utility vehicles (UVs) will drive volume growth this fiscal, aided by new launches, easing interest rates, rising compressed natural gas (CNG) adoption and rural tailwinds.

“PV growth will moderate to 2-4 per cent this fiscal, but UVs will continue to cruise with 10 per cent growth, supported by new launches. With UVs contributing 68-70 per cent of volumes and bulk of upcoming models, the shift toward premiumisation is structural,” said Anuj Sethi, Senior Director, Crisil Ratings.

Rural recovery, expected from likely above-normal monsoon and reduction in interest rates, should improve demand for entry-level cars, he added. Healthy cash flows and robust cash surplus will enable original equipment manufacturers (OEMs) to fund their high capex comfortably, while keeping their balance sheets strong and credit profiles stable. The domestic market accounted for 85 per cent of total volume last fiscal, with exports accounting for the rest.