Passenger Vehicle (PV) industry to hit record five million domestic, export units in FY26: Crisil

India's passenger vehicle (PV) industry is projected to achieve a record cumulative domestic and export volume of five million units in the current financial year (FY26) despite a slowdown in the annual growth rate to 2-4%, according to Crisil Ratings. This marks the fourth consecutive year of record sales. However, the pace has significantly eased from the 25% surge in FY23 following the pandemic. The domestic market accounted for approximately 85% of the total volume in the last fiscal year (FY24), with exports making up the remainder. Growth in the electric vehicle (EV) segment has decelerated despite new launches and declining battery costs. EV penetration remains at a moderate 3-3.5%, hindered by high prices, limited charging infrastructure, and range anxiety, restricting the market to urban consumers seeking second cars.

Looking ahead, Crisil Ratings noted that while the entry of global premium EV models like Tesla will intensify competition in the premium segment (which represents less than 10% of overall volume), high import tariffs will likely limit their impact. The growth of utility vehicles (UVs) is expected to continue at around 10%, supported by new launches, with UVs contributing 68-70% of total volumes. The shift toward premiumisation in the PV market is seen as structural. Rural recovery, bolstered by an anticipated above-normal monsoon and interest rate reductions, is expected to drive demand for entry-level cars. However, export growth is forecasted to moderate to 5-7% in FY26 due to global challenges, with limited impact from the upcoming 25% United States (US) tariff. Alternative markets such as Mexico, the Gulf countries, and South Africa could provide opportunities for Indian Original Equipment Manufacturers (OEMs).

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.