Autobayng News Team
India’s passenger vehicle (PV) industry growth is expected to moderate to 4-6 per cent in FY27, mainly due to a high base and evolving macroeconomic conditions, ratings agency ICRA said on Friday.
For FY26, the PV industry is estimated to report wholesale volume growth of around 7-9 per cent, supported by strong festive demand, GST rate cuts and multiple new model launches, ICRA noted.
“The industry continues to witness structural shifts, with utility vehicles accounting for nearly 67 per cent of overall sales, reflecting sustained premiumisation trends,” it said.
ICRA also noted that the rising penetration of alternative powertrains, such as CNG and electric vehicles, is aiding demand diversification in the domestic market.
Despite the anticipated moderation, PV original equipment manufacturers (OEMs) are expected to continue with significant capital expenditure towards new product development and electric vehicle platforms, it added.The ratings agency said that key monitorables for the PV industry include inflationary pressures arising from geopolitical developments and interest rate movements.
Tractor industry outlook
For the tractor industry, ICRA expects growth to moderate to 1-4 per cent in FY27, again due to a high base and expected normalisation in demand.
The segment has seen a sharp uptick in FY26, with wholesale volumes growing 22.8 per cent in the first 11 months, supported by favourable monsoons, improved agricultural output and a GST reduction on tractors.
“Industry volumes are expected to reach an all-time high in FY2026,” ICRA said.
However, the agency cautioned that tractor demand remains closely linked to monsoon performance and rural income levels, with potential El Niño conditions posing a downside risk.
Despite the moderation expected in both segments, ICRA said the credit profiles of OEMs are likely to remain strong, supported by low leverage, healthy liquidity and improving operating performance.
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