India’s automobile industry has made a strong comeback in FY2025–26, marking its best performance in the last seven years. After a slow start, the sector picked up significant momentum in the latter half of the year, with all major segments—passenger vehicles, two-wheelers, three-wheelers, and commercial vehicles—posting impressive growth. This turnaround clearly signals that the market has entered a solid recovery phase.
According to Society of Indian Automobile Manufacturers (SIAM), total domestic vehicle sales rose by 10.4% to 28.3 million units in FY26. A major catalyst behind this surge was the implementation of GST 2.0 in September, which reduced vehicle prices and boosted consumer demand. While the first half of the year remained relatively subdued, the second half—especially the January to March quarter—saw a sharp rise, with sales jumping 23.6% to 7.64 million units, reflecting renewed buyer confidence.
The two-wheeler segment emerged as the biggest growth driver, recording sales of 21.7 million units and surpassing pre-pandemic highs. Passenger vehicles also touched a record 4.643 million units, driven largely by the growing popularity of SUVs and utility vehicles. Electric vehicles gained strong traction as well, with electric passenger vehicle sales rising by over 80%, indicating a clear shift towards cleaner mobility. Meanwhile, three-wheelers and commercial vehicles also posted solid growth, supported by rising urban mobility needs, infrastructure development, and improved credit availability.
Exports further strengthened the industry’s performance, with both passenger vehicles and two-wheelers witnessing notable increases in overseas shipments. Looking ahead, the industry remains optimistic about sustaining this growth momentum in FY27, supported by stable economic conditions and strong domestic demand. However, potential risks such as rising crude oil prices due to geopolitical tensions could impact costs and supply chains. Overall, FY26 has marked a significant milestone for India’s auto sector, positioning it strongly for future expansion.
