Passenger vehicle (PV) wholesale volumes have grown by 29% YoY in 5M FY2027; volume growth is expected to moderate to 4-6% in FY2027 on a high base. Credit profile of PV OEMs is likely to remain healthy, supported by improved profitability, low leverage, adequate liquidity and/or strong parentage.

ICRA expects wholesale volume growth of 4-6% in FY2027 (29% growth in 5M FY2027), constrained by a high base and recent price hikes announced by the original equipment manufacturers (OEMs). Further, a weaker than expected monsoon could dampen rural sentiments and adversely impact volume growth in H2 FY2027.

In 5M FY2027, retail sales grew by a strong 27% YoY, supported by traction of newly launched models, an extended summer wedding season and the sustained positive impact of the revised Goods and Services Tax (GST) rates. Sales volumes in 5M FY2026 were impacted by heightened geopolitical tensions in northern India. In Aug 2026, inventory levels rose by 5 days sequentially to 38-40 days, driven by pre-festive stocking, but remain well below the 56-day levels in August 2025.

Exhibit 1: Trend in domestic PV sales (in units)

Source: CMIE; ICRA Research