New Delhi, March 27: The growth rate of India’s automobile sector may experience a slowdown. This comes after a robust performance in the current financial year (FY26), driven by improved affordability due to GST cuts and sustained economic activity. This information was revealed in a report released on Friday.
According to the ICRA report, changes in GST have primarily fueled demand, enhancing the affordability of two-wheelers and making the creation of commercial vehicle fleets more economical than before.
The report also noted that the reduction in GST rates, increased freight rates, and infrastructure activities have spurred growth in the commercial vehicle sector.
The rating agency reported a 23.8% increase in wholesale sales of commercial vehicles in February 2026 compared to the previous year, while domestic wholesale sales rose by 12.5% in the first 11 months of FY26.
Retail sales saw a significant increase of 28.9% compared to the previous month, with strong growth in medium and heavy commercial vehicle sales. Light commercial vehicles (LCVs) benefited from improvements in last-mile freight and cost reductions due to GST.
The report estimates a growth of 7-9% in this segment for FY26, while the forecast for FY27 is set at 4-6%.
Despite the surge in demand, the report warns that high financing costs and the rising demand for older vehicles, particularly in the LCV segment, could pose challenges in the near future.
The two-wheeler segment has shown considerable improvement, with rural demand rising, better financing availability, and increased affordability due to GST, leading to sales reaching their highest levels in several years for FY26.
The rating agency anticipates a nearly 9% increase in domestic wholesale sales for FY26, which is expected to decline to 3-5% in FY27 due to a high base effect.
The report further states that the replacement cycle and rising rural incomes are expected to support demand, with GST cuts enhancing the affordability of two-wheelers under 350cc.
–
My name is Narendra Jijhontiya. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including TECHNOLOGY, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
Leave a Comment