After record year, India’s automobile sector eyes 6–8% sales growth in 2026

New Delhi: After a record year, India’s automobile industry is entering 2026 on a relatively strong footing, with sales growth expected in the 6–8 per cent range, supported by policy tailwinds and resilient consumer demand. Industry executives point to GST rationalisation, easing monetary conditions and income tax relief as key drivers likely to improve affordability and sustain demand across segments.

Passenger vehicle (PV) volumes rebounded in 2025 after a slow start, aided by firm urban demand, stable rural incomes and improved access to financing. SUVs continued to dominate sales, while CNG and electric vehicles gained traction, signalling a gradual shift in the powertrain mix rather than a sharp transition.

However, 2026 is also shaping up as a preparatory year ahead of tighter regulations. Rising compliance costs linked to upcoming CAFE norms from 2027, future emission standards, and mandatory safety requirements such as ABS and CBS for two-wheelers are expected to push up costs, especially in price-sensitive segments. Supply-side risks persist as well, with global uncertainties, tariffs, currency depreciation and component availability posing challenges for premium and component-intensive vehicles.

Maruti Suzuki MD and CEO Hisashi Takeuchi said GST benefits are expected to fully play out in 2026, helping drive industry growth of 7–8 per cent and supporting employment generation. He noted that 2025 marked a landmark year, with passenger vehicle volumes likely to touch a record 45 lakh units.

Federation of Automobile Dealers Associations (FADA) president CS Vigneshwar said dealers expect double-digit growth in two-wheelers and PVs in 2025, with momentum likely to extend into early 2026. According to FADA’s December 2025 Dealer Satisfaction Index, 74 per cent of dealers expect good to very good growth over the next three months, though sharp price hikes could dampen demand.

Society of Indian Automobile Manufacturers (SIAM) president Shailesh Chandra said all segments are set to close 2025 with growth, with exports expected to post strong double-digit expansion, reflecting rising global acceptance of India-made vehicles. He added that policy support and improving global conditions underpin optimism for 2026.

Automakers are increasingly following a dual-track investment strategy, expanding capacity for conventional vehicles while accelerating investments in electrification, charging infrastructure and platform upgrades.

Mahindra & Mahindra, Tata Motors, Honda, Renault, Toyota and other manufacturers expressed confidence in sustained demand, particularly for SUVs and alternative fuel vehicles.

Luxury carmakers also remain upbeat, though they flagged risks from rupee depreciation and global supply-chain pressures.