TL;DR
India's auto sector is expected to see a slowdown in growth in FY2027 to 3-6% across segments, after a strong policy-driven FY2026, primarily due to a high base effect and external uncertainties.
India's automobile sector is projected to experience a moderation in growth during fiscal year 2027, following a robust, policy-supported expansion in FY2026. According to credit rating agency ICRA, the strong performance in FY2026 was largely driven by GST rationalization, which enhanced vehicle affordability across segments and stimulated demand recovery. This included significant improvements in two-wheelers and commercial vehicles due to better fleet economics.
The commercial vehicle (CV) segment, in particular, was a strong performer in FY2026, with domestic wholesale volumes increasing by 12.5% year-on-year in the first eleven months, and retail volumes growing by 28.9%. Medium and heavy commercial vehicles saw notable gains, while light commercial vehicles benefited from increased last-mile freight activity. ICRA anticipates the CV segment to exceed its earlier growth estimates for FY2026. However, growth is expected to slow to 4-6% in FY2027, influenced by elevated funding costs and a rising preference for pre-owned vehicles. The two-wheeler segment also experienced a broad-based recovery.
