Electric vehicle adoption added further fuel to the rally, with electric passenger vehicle registrations jumping over 80 per cent in the year, and EV two-wheeler offtake rising sharply in March amid growing concerns over fuel prices.
New Delhi: India’s automobile industry scripted a landmark chapter in Financial Year 2025-26, with every major vehicle category — passenger vehicles, commercial, three-wheelers and two-wheelers — recording their highest-annual sales in a single financial year, for the first time in seven years.
The industry, which had started the year on a modest note with a slight de-growth in the first half, staged a powerful comeback in the second half, powered by a confluence of structural policy reforms, improved consumer sentiment and supportive macroeconomic conditions.
According to the data released by the Society of Indian Automobile Manufacturers (SIAM), Passenger vehicles closed FY 2025-26 at a record 46.43 lakh units, growing 7.9 per cent over the previous year.
Commercial vehicles posted their best-ever annual sales of 10.80 lakh units, up 12.6 per cent, while three-wheelers touched 8.36 lakh units with a growth of 12.8 per cent.
The two-wheeler segment was the crown jewel of the year, surpassing 2.17 crore units — a growth of 10.7 per cent — crossing a peak last achieved in FY 2018-19. The turnaround in the second half was particularly pronounced, with passenger vehicles growing 16.7 per cent and two-wheelers surging 21.5 per cent in H2, after a flat or negative H1.
Electric vehicle adoption added further fuel to the rally, with electric passenger vehicle registrations jumping over 80 per cent in the year, and EV two-wheeler offtake rising sharply in March amid growing concerns over fuel prices.
The January-to-March quarter of FY 2025-26 was equally historic, with all four segments posting their highest-ever Q4 sales. Passenger vehicles recorded 13.16 lakh units in Q4, up 13.2 per cent, while commercial vehicles clocked 3.25 lakh units, growing 18.9 per cent.
Three-wheelers posted Q4 sales of 2.27 lakh units, a jump of 26.7 per cent, and two-wheelers delivered a stellar 57.73 lakh units, surging 26.4 per cent over Q4 of the previous year.
Shailesh Chandra, President, SIAM, attributed the strong performance to a series of well-timed policy interventions. “Though FY 2025-26 started modestly, the Indian auto industry has closed the year on a high note with every vehicle category posting their highest-ever sales in a financial year after seven years. The strong contributors to this growth have been the positive sentiments created through GST 2.0 reforms and multiple repo rate cuts during the year,” he said.
GST rationalisation improved affordability, income tax relief boosted purchasing power, and successive RBI repo rate cuts lowered financing costs and eased the total cost of ownership — particularly for commercial vehicle fleet operators.
Exports, too, had a landmark year, with passenger vehicle exports touching 9.05 lakh units, up 17.5 per cent; two-wheeler exports at a record 51.8 lakh units, up 23.4 per cent; three-wheeler exports surging 50.1 per cent to 4.61 lakh units; and commercial vehicle exports growing 17.4 per cent to 0.95 lakh units.
Rajesh Menon, Director General, SIAM, said, “Each vehicle category posted their highest-ever sales in the January to March quarter with double-digit growth compared to the previous year’s quarter.”
Meanwhile,according to a report by Yes Securities, the Medium and Heavy Commercial Vehicle (MHCV) segment is expected to remain strong through FY27-28,
The report estimates a 6-8 per cent compound annual growth in volumes until total industry volumes (TIV) stabilise around FY31-32.
“MHCV cycle likely to stay strong over FY27/28; 6-8% vols CAGR likely before TIV stabilizes in FY31-32,” the report noted.
Growth in the near to mid-term is likely to be driven by multiple factors. These include delayed vehicle replacements due to GST 2.0-related price changes and an ageing fleet. Around 42 per cent of vehicles are currently 8.5-10 years old, accounting for nearly 2 million units that may need replacement.
The report also highlighted that demand will be supported by the release of funds stuck in infrastructure projects over the past few months, a low base in the first half, and lean inventory levels entering FY27.
Beyond FY27, demand is expected to remain strong due to continued infrastructure spending, improved fleet utilisation, and pre-buying ahead of BS7 emission norms expected by 2028. Fleet utilisation has already improved to 70-75 per cent from earlier levels of 53-55 per cent. The upcoming BS7 norms could increase vehicle costs by 10-12 per cent.
(ANI)