ICRA sees growth moderation for PV industry in FY27

Citing the impact of a high base and evolving macroeconomic headwinds, rating agency ICRA in its latest report has projected India's passenger vehicle (PV) industry growth to ease to 4-6% in FY2027 from 8.6% in FY2026, despite stable demand.

The report flags a weak monsoon outlook and the ongoing West Asia crisis as critical factors, as both could affect inflation dynamics and consumer sentiment, making these factors crucial to monitor for the industry.

ICRA is expecting demand to remain supported by GST rate cuts and new model launches by original equipment manufacturers (OEMs), which will partly offset the impact of the elevated base. It highlighted that wholesale volumes witnessed 16% rise year-on-year to 4.4 lakh units in March 2026, while retail sales reported growth of 21%, on the back of strong demand and new launches.

For FY2026, wholesale volumes grew 8.6% year-on-year to an all-time high of 4.7 million units, while retail volumes rose 11% to 4.6 million units. ICRA said the growth in FY2026 was uneven, with volumes declining 0.2% in the first half but rising sharply by 17% in the second half following GST rate changes.

The report also highlighted the data from the Federation of Automobile Dealers Association, which showed improvement in channel health, with inventory levels declining to around 28 days in March 2026 from over 50 days a year ago, aided by stronger retail offtake. The report further added that export volumes increased by 18% in FY2026, driven by higher supply from Indian OEMs.