SIAM: Passenger Vehicle Sales to See Modest Growth in FY26, SUVs, EVs Drive Demand

Passenger vehicle sales are projected to grow by 1%-4% in FY26, supported by SUV demand and EV launches. Despite tax reliefs and a repo rate cut, entry-level car sales remain sluggish due to affordability issues.

Passenger Vehicle Sales Expected to See Modest Growth in FY26

Passenger vehicle sales in FY26 are expected to grow in low single digits due to a high base effect, with demand largely driven by sport-utility vehicles (SUVs) and new electric vehicle (EV) launches.

However, sales of entry-level cars are likely to remain sluggish as affordability concerns persist. According to automakers’ projections presented at an industry meeting organized by the Society of Indian Automobile Manufacturers (SIAM), the sales of cars, SUVs, and vans may rise by 1%-4% in FY26.

Although the recent repo rate cut by the central bank and income tax reliefs in the budget are expected to boost middle-class consumer spending, concerns remain regarding affordability at the entry level.

Leading Automakers Set Conservative Growth Targets

Key automakers have shared their growth estimates for FY26. Maruti Suzuki and Hyundai Motor India expect passenger vehicle sales to grow by 1%-1.5%, while Mahindra & Mahindra anticipates 1%-2% overall PV growth, with SUV sales expected to surge by 8%. Mahindra, the maker of Thar and XUV700 SUVs, aims to outperform industry growth.

Tata Motors projects 2%-4% growth, while Kia India forecasts industry expansion of 2%-3%.

An industry expert, speaking anonymously, highlighted that the growth is coming from an already high base, making even small percentage increases significant. The market, in terms of demand and supply, has stabilized, and future sales will depend on overall economic conditions.

Luxury Car Market Poised for Steady Growth

On the luxury front, BMW anticipates high-single-digit growth in FY26, contingent on policy stability, a consistent tax and regulatory framework, and increased government spending on infrastructure. Luxury car sales grew 8% in CY2024, reaching 54,000 units.

Conclusion

Leading automakers have lowered their growth projections, citing a high base effect and market stabilisation. Despite supportive economic measures like repo rate cuts and tax reliefs, mass-market expansion remains limited by stagnant first-time buyer participation. 

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