Passenger vehicle wholesale volumes recorded a strong 27 per cent year-on-year growth in the last fiscal, reaching 4.4 lakh units, while retail sales grew 33 per cent on the back of robust consumer demand, newly launched models, and an extended summer wedding season, according to the report by ratings agency Icra.
However, the agency said that rising fuel and commodity prices, along with concerns around a weak monsoon, remain key factors to watch.
According to Icra, utility vehicles continued to dominate the segment, accounting for nearly 68 per cent of overall passenger vehicle sales in FY2026, while demand recovery was also visible across mini and compact car categories following GST rate cuts in September last year.
Exports remained healthy, rising 13 per cent annually in May this year, reflecting an increasing supply push by Indian automakers in global markets.
At the same time, electric vehicle adoption also strengthened, with EV penetration in the passenger vehicle segment rising to nearly 6 per cent in early FY2027, it said.