Car sales surge 8 percent in FY26 on GST boost, defying war jitters
March sales jump 16 percent, capping a year of steady growth; price hikes could dent demand in FY27
Last Updated: Apr 02, 2026, 10:00 IST4 min
Prefer us on Google
Advertisement
In a Nutshell
- Car sales rose 8 percent in FY26, boosted by GST rate cuts
- March sales jumped 16 percent, reaching 4.5 lakh units
- Price hikes and new norms may slow demand in FY27
Carmakers ended fiscal 2026 (FY26) on a strong footing, with demand boosted by GST cuts extending into the sixth month in March despite geopolitical tensions.
Wholesale despatches rose about 16 percent year-on-year in March to approximately 4.5 lakh units compared to 3.87 lakh units sold in March 2025, according to industry data.
For FY26, the passenger vehicle (PV) industry is expected to have posted record wholesale volumes of 47 lakh units, an 8 percent growth over 43.4 lakh units in FY25.
The resilience in demand—which picked up after the reduced GST prices came into effect on September 22 last year—shows that lower prices have continued to outweigh concerns around war-led uncertainty.
Market leader Maruti Suzuki extended its dominance, crossing the 20 lakh annual sales mark for the third straight year. The company posted total FY26 sales of 24.2 lakh units, including record domestic volumes of 18.6 lakh and exports of 4.47 lakh units. In March alone, Maruti sold 2.25 lakh units, with exports of 47,040 vehicles, underscoring growing demand in overseas markets.
“Exports assume a crucial role in supporting economic resilience… our push reflects our continued commitment to national priorities,” managing director & CEO Hisashi Takeuchi said, highlighting a 34 percent surge in shipments and the company’s expanding global footprint.
The carmaker said it is seeing strong demand for its first EV (electric vehicle), the eVitara, with over 2,000 units despatched to dealers in the one month since its launch in India.
SUV king Mahindra & Mahindra saw sales of 99,969 vehicles in March, up 21 percent year-on-year.
Domestic SUV volumes rose 25 percent to 60,272 units, capping a year in which the company recorded its highest-ever sales across both SUVs and light commercial vehicles (LCVs).
“The financial year ended on a positive note, with Mahindra clocking its highest-ever volumes in both SUV (6.6 lakh SUVs, up 20 percent) and LCV (2.89 lakh, up 13 percent) segments, a significant milestone for the company,” said Nalinikanth Gollagunta, CEO of the automotive division.
At Tata Motors Passenger Vehicles, sales grew 15 percent in FY26. The company sold about 6.42 lakh units during the year, driven by strong demand for SUVs, CNG vehicles and electric models. EV sales alone crossed 92,000 units, rising 43 percent.
“The industry witnessed a strong rebound in the second half, supported by GST implementation and a robust festive season,” said managing director and CEO Shailesh Chandra, adding that greener technologies are gaining traction amid rising consumer confidence.
Hyundai Motor India reported a more measured growth, but maintained steady momentum, with March sales rising 2.5 percent to 69,004 units.
Domestic volumes hit a record for the month at 55,064 units, up 6.3 percent, while exports stood at 13,940 units.
“We remain confident of sustaining the pace while staying mindful of geopolitical uncertainties,” said CEO Tarun Garg, pointing to new product launches as a key driver.
Among smaller carmakers, Renault, posted a sharp 77 percent jump in March sales to 5,046 units, aided by new product rollouts, including the Duster.
Honda Cars India reported a more modest 5 percent rise in domestic sales to 7,585 units, with the company banking on its upcoming EV launch to sustain demand.
Also Read
The return of the Rs5-lakh car
Bumpy Road Ahead
Industry executives and analysts expect growth to cool going forward, even as structural drivers remain intact. Crisil expects PV volumes to grow 3-5 percent in FY27, down from earlier forecast of 5-7 percent.
"Growth in FY27 will remaining challenging if the first half doesn’t see reasonable growth as the high base effect in the second half will weigh in on the overall fiscal growth," said Hemal Thakkar, Senior Director & Senior Practice Leader, Crisil Intelligence.
"Currently we are assuming normal rainfall in our base case and crisis pertaining to west Asia abating in a week or two basis which we are projecting domestic PV volumes to expand by just 3-5 percent while domestic two-wheeler and three-wheeler volumes will grow by 5-7 percent, down from earlier expectations of 5-7 percent for PVs and higher single digit for 2 and 3 wheelers. The growth could remain challenging in parts of FY27 as high base effects especially in the second half and supply-side constraints begin to weigh in on the sector."
Tata’s Chandra was optimistic and cited continued growth in SUVs, EVs and CNG vehicles, even as he flagged geopolitical risks that could disrupt supply chains.
S&P Global Mobility forecasts expansion of about 4.8 percent in 2027, with director Puneet Gupta warning that the GST-led demand boost could give way to a “payback period” amid rising prices and regulatory changes.
“The demand momentum generated by the GST rate cut since September 2025 has been a key driver for the industry in 2026,” said Gupta.
However, amid uncertainties, the market could be entering a phase of subdued demand, potentially leading to a payback period around 2027, he said. “Additionally, next year’s developments such as the implementation of CAFE 3 norms, price increases, high competition and the introduction of new powertrains are likely to impact affordability, thereby exerting pressure on overall demand in FY27.”
Price increases are already taking place. Tata Motors PV and JSW MG have raised prices while Maruti on Wednesday signalled price hikes ahead. “We need to increase prices and pass it on to customer because commodity prices are high,” Partho Banerjee, senior executive officer for marketing & sales at Maruti Suzuki, said on a media call on Wednesday.
First Published: Apr 02, 2026, 10:04
Subscribe NowLatest News
Advertisement
Advertisement
Advertisement