Passenger vehicle sales expected to grow in low single-digits in FY26, driven by SUVs and EV launches: SIAM estimates

Passenger vehicle sales are expected to grow in low single-digits, on a high base, in the coming financial year, largely driven by demand for sport-utility vehicles and new electric vehicle launches. Sales of entry-level cars will however likely remain sluggish during the year.Sales of cars, SUVs and vans may grow by 1-4% in FY26, according to automakers’ estimates presented at an internal industry meeting organised by the Society of Indian Automobile Manufacturers (SIAM) on Wednesday.

While recent reduction in repo rate by the central bank and income tax reliefs announced in the budget are expected to give some impetus to consumption among middle-class Indians, concerns remain about affordability among consumers at the entry-level.

According to a person aware of the deliberations, leading automakers present at SIAM’s Looking Ahead conclave said there has not been any increase in the share of first-time buyers – 42% in the last two years – which is limiting an expansion in car sales in the mass segment.“Industry leaders Maruti Suzuki, Hyundai Motor India both expect passenger vehicle sales to grow by 1-1.5% in FY26. Mahindra & Mahindra too expects overall passenger vehicle sales to grow by 1-2% but demand for utility vehicles to outpace the broader market and grow by 8%,” the person told ET.

Mahindra—the maker of Thar and XUV700 SUVs—is aiming to outperform industry growth in FY26. While Tata Motors expects its PV sales to grow by 2-4% next fiscal, Kia India is estimating industry growth of 2-3%.

“Car sales in the upcoming year will depend on a pure-play economy as the market in terms of demand and supply is normal,” said an industry veteran asking not to be named. “While the percentage growth is likely to be small, it is important to factor in the fact that this growth is coming on a very high base.”

Partho Banerjee, senior executive director (marketing and sales) at Maruti Suzuki; Tapan Ghosh, vice president (sales) at Hyundai Motor India; Vivek Srivatsa, chief commercial officer at Tata Passenger Electric Mobility; Hardeep Singh Brar, senior VP and head (marketing and sales) at Kia India and Vitesh Barar, director (marketing) at BMW Group India were among the senior industry executives present in the meeting.

At the upper end of the spectrum, luxury car maker BMW expects sales to grow in high-single digits, provided there is consistency in policies, tax and regulatory framework, and increased capital spending by the government in infrastructure projects. Luxury car sales grew by about 8% to 54,000 units in CY2024.