Wholesale and retail volumes gain positive traction from GST rate cuts and the festive season. Despite a 1.5% YoY wholesale volume contraction in H1 FY2026, ICRA expects industry volumes to grow by 1-4% in FY2026 with a likely recovery in demand aided by GST rate cuts and a favourable festive season.

• In September 2025, retail sales grew by 5.8% on YoY basis with demand for passenger vehicles (PVs) improving post Goods & Service tax (GST) rate cuts, which led to improved affordability. However, due to the Navratras being towards the end of the month, the overall retails were deferred to an extent to October.
• The wholesale volumes grew by 4.5% YoY and 15.7% sequentially to 3.7 lakh units in Sep 2025 as the original equipment manufactures (OEMs) increased dispatches to dealers for the festive season. In H1 FY2026, wholesale volumes contracted by 1.5% on a YoY basis, while retail volumes witnessed a marginal 1.0% growth