New Delhi – India’s passenger vehicle wholesale volumes increased 29% during the April-August period of fiscal 2027, although growth is expected to moderate to 4% to 6% for the full financial year due to a higher comparison base, according to a report released Thursday by credit rating agency ICRA.
The report warned that recent price increases by automakers and a weaker-than-expected monsoon could affect rural demand and slow vehicle sales during the second half of the fiscal year.
Retail passenger vehicle sales rose approximately 27% during the first five months of fiscal 2027, supported by new model launches, an extended summer wedding season and the continued benefits of revised Goods and Services Tax (GST) rates.
ICRA expects automakers to maintain healthy profit margins through improved operating leverage, cost controls and price increases, following margin compression of approximately 200 basis points in the first quarter of fiscal 2027.
The report also noted that automakers’ credit profiles are likely to remain strong, supported by low debt levels, healthy liquidity and strong parent companies.
Dealer inventory increased by five days in August to approximately 38 to 40 days as manufacturers prepared for the festive season. However, inventory levels remained significantly below the 56 days recorded in August 2025.
Utility vehicles continued to dominate the market, accounting for 68% of total passenger vehicle sales during April-August. The segment benefited from changing consumer preferences and several new model launches.
Demand for entry-level cars also showed signs of recovery following GST rate reductions, with sales improving since the second half of fiscal 2026.
Meanwhile, vehicles powered by alternative technologies, including compressed natural gas (CNG) and electricity, accounted for 34% of overall sales. Their growing popularity was supported by new models and expanding fueling and charging infrastructure.
ICRA estimated that automakers will maintain annual capital expenditures of approximately $2.7 billion to $3.2 billion (250 billion to 300 billion rupees), representing about 5% to 6% of revenue over the next several fiscal years.
Much of the investment is expected to support new product development and the expansion of electric vehicle platforms and manufacturing capabilities. (Source: IANS)
