Summary:

India's passenger car sector is projected to reach a record five million units in FY26, despite a slower growth rate of 2–4%, down from 25% in FY23. Domestic sales accounted for 85% of the total volume in FY24. Growth in electric vehicles (EVs) has slowed, with penetration at 3–3.5%, due to high prices, limited charging infrastructure, and range anxiety—restricting adoption mainly to urban consumers seeking a second car.

Crisil Ratings expects increased competition in the premium EV segment from new entrants like Tesla, though high import tariffs will likely limit their impact. Utility vehicles (UVs) are expected to continue growing at around 10%, contributing 68–70% of total sales. The structural shift toward premiumisation remains strong. Rural recovery—supported by above-normal monsoons and interest rate cuts—is expected to boost demand for entry-level cars. While export growth may slow to 5– 7%, alternative markets such as Mexico, the Gulf countries, and South Africa offer promising opportunities for Indian OEMs.

Source: IBEF

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