TL;DR
India's automotive industry is forecasted to achieve 6-8% sales growth in 2026, supported by favorable government policies and strong consumer demand, despite impending regulatory changes and potential price increases.
The Indian automobile industry is projected to maintain strong growth momentum into 2026, with sales expected to rise by 6-8% following a record-breaking 2025. This positive outlook is largely attributed to supportive government policies, including GST rationalization, easing monetary conditions, and income tax relief measures designed to enhance affordability and sustain consumer demand across various vehicle segments.
Passenger vehicle sales in 2025 saw a significant rebound, driven by robust urban demand, stable rural incomes, and improved financing options. SUVs continued their dominance, while CNG and electric vehicles experienced increased traction, signaling a gradual yet consistent shift in the powertrain mix. Industry executives expect this positive momentum to carry into early 2026, though potential steep price hikes by OEMs could exert pressure on demand.
Looking ahead, 2026 is also seen as a preparatory year for the industry to adapt to tighter regulations, including upcoming CAFE norms from 2027 and future emission standards, which may lead to higher compliance costs and impact pricing strategies.
