ICRA Predicts Modest Growth in Domestic Passenger Vehicle Sales FY26, ETAuto

Major automobile manufacturers are set to announce their August sales figures on September 1.New Delhi: India’s domestic passenger vehicle (PV) industry is expected to register a modest 1–4 per cent growth in wholesale volumes in the current fiscal, ratings agency ICRA said on Friday. The forecast comes against the backdrop of a 1.1 per cent contraction in volumes during the first four months of FY26 (April–July).

ICRA attributed the tempered outlook to elevated inventory levels and a high base effect, though steady model launches and potential reforms in Goods and Services Tax (GST) could lend some support to demand in select categories. The central government has also proposed the overhaul of the GST structure, with wide expectations that GST on small cars would be cut to 18 per cent.

Major automobile manufacturers are set to announce their August sales figures on September 1.

July auto sales

In July, wholesale sales rose 8.9 per cent sequentially as automakers built inventory ahead of the festive season, but remained flat year-on-year at 3.4 lakh units. Retail sales climbed 10.4 per cent month-on-month, though they dipped marginally by 0.8 per cent compared to last year, the agency noted.

Sport utility vehicles (SUVs) continued to dominate the market, accounting for 65–66 per cent of overall PV volumes. ICRA expects utility vehicles to remain the key growth driver for the sector in the near term.

Citing data from the Federation of Automobile Dealers Associations (FADA), the agency said inventory levels had risen to 55 days by the end of July, a concern for the industry.

Exports, meanwhile, recorded a 9 per cent year-on-year increase in July, albeit on a low base, with Maruti Suzuki India and Hyundai Motor India leading the recovery.

• Published On Aug 29, 2025 at 12:52 PM IST

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