Passenger vehicle (PV) wholesale volumes have grown by 7.8% YoY in 11M FY2026; volume growth expected to moderate to 4-6% in FY2027 on a high base. The credit profile of PV OEMs is expected to remain healthy, supported by improved profitability, low leverage, adequate liquidity and/or strong parentage.

ICRA expects wholesale volume growth of 1-4% in FY2026 with an anticipation of sustained demand aided by GST rate cuts across segments. Continued new model launches by original equipment manufacturers (OEMs) and an expectation of demand sustenance in the winter wedding season is expected to support volume growth for the industry.

In 11M FY2026, retail sales grew by 9.5%, led by an all-time high festive season, prolonged positive impact of GST rate cuts on passenger vehicles and multiple new model launches by OEMs in Q4 FY2026. The industry witnessed healthy increase in volumes during H2 FY2026, which led to reduction in inventory days to 27-29 days at the end of February 2026 (as per the Federation of Automotive Dealers Association, or FADA).