India’s automotive industry began FY2026 on a cautiously optimistic note. While total vehicle production (excluding two-wheelers) grew by 10% year-on-year, supported by robust performances in the passenger car and tractor segments, the two-wheeler segment saw a 5% dip due to inventory correction and a high base effect. The passenger car market continued to be buoyed by strong SUV demand, rising exports, and the growing acceptance of strong hybrids and battery EVs. Commercial vehicle segments (LCV & HCV) reflected stable growth, riding on the back of government-led infrastructure revival and freight movement. Meanwhile, three-wheelers witnessed a retail surge of 20%, largely driven by rapid electrification and last-mile demand.
Macro fundamentals remain favourable: CPI inflation eased to 3.2%, GST collections hit a record ₹2.37 trillion, and the PMI rose to 58.2, reflecting solid manufacturing expansion. Rural demand uplift supported tractor and two-wheeler retail trends, even as EV adoption remained concentrated in urban markets. As new electric models enter the market and charging infrastructure expands, electrification is set to gain pace in the coming quarters.
Despite external economic headwinds, the sector appears well-positioned for sustained growth through the latter half of FY2026.
For a detailed segment-wise analysis, powertrain trends and inventory insights refer to the attached full report. Automotive_Market_Update_04.2025