India’s light vehicle sales growth to moderate as West Asia crisis weighs on sentiment: Moody’s

India’s light vehicle industry is set to see sales increase of 7 per cent in 2026 and 5 per cent in 2027 as the West Asia crisis dampens consumer confidence, according to Moody’s latest Global Auto Manufacturing Outlook.

The industry witnessed 20 per cent year-on-year growth in the first four months of 2026 on the back of tax rationalisation, interest rate cuts and income tax relief which materially improved vehicle affordability and financing conditions.

“We expect this growth to moderate as the demand surge from these policy measures stabilises,” the report noted.

Moody’s pointed out that increased oil prices due to ongoing conflict in West Asia has not been fully transmitted to the consumers, however, any acceleration in pass-through would weigh on demand for internal combustion engine vehicles

“While elevated fuel prices may encourage a transition to EVs, they currently represent only about 6 per cent of passenger vehicle sales — significantly less than the government’s target of 30 per cent by 2030, limiting substitution in the near future, the report said.

On the global outlook, the report said light vehicle sales will register a muted growth of 0.3 per cent to around 92.3 million vehicles this year, from around 92 million vehicles sold in 2025.

“We do not expect any significant recovery in 2027 and forecast sales growth of just 0.5 per cent globally to 92.8 million units,” the report added.