India's PV sales to surpass 5 million units in FY 2026

New Delhi, Apr 25 (IANS): India's passenger vehicle (PV) industry is set to reach new heights in this fiscal, with domestic and export sales crossing 5 million units in total. However, the annual growth rate will slow down to 2-4 percent. This information was given in a report released on Friday. A report by Crisil Ratings said that this is the fourth consecutive year that sales have reached record levels, although sales have decreased significantly since the 25 per cent growth in FY2023 following the Corona pandemic. According to the report, new launches, reduction in interest rates, increase in adoption of CNG and favourable conditions in rural areas will boost utility vehicle (UV) sales growth this fiscal.

Anuj Sethi, senior director, CRISIL Ratings, said, "PV growth will be in the range of 2-4 per cent this fiscal, but UV growth will be 10 per cent, supported by new launches." UV will contribute 68-70 percent of the volume.

He said a better-than-normal monsoon and lower interest rates are expected to improve rural areas, leading to a revival in demand for entry-level cars. Improved cash flows and strong cash surpluses will keep their original equipment manufacturers (OEMs) in a good position of funding their higher capital expenditure and their balance sheets strong and credit profiles stable. In the last financial year, the domestic market accounted for 85 per cent of the total volumes, while exports accounted for the rest. The fuel mix is also evolving rapidly. The demand for CNG-powered PV is increasing. Their share is likely to touch 15 per cent this fiscal due to lower operating costs and a rapidly growing network of over 7,000 refuelling stations.

"While current geopolitical tensions could impact export momentum, OEMs could shift to alternative markets such as Mexico, Gulf countries, South Africa and East Asia," the report suggested. "PV capex is expected to be at Rs 30,000 crore this fiscal as OEMs are ramping up capacity, accelerating EV investments and boosting localisation and digital upgrades," said Poonam Upadhyay, director, CRISIL Ratings. However, it remains highly capex sustainable, supported by strong internal sources and a cash surplus, with capex-to-Ebitda stabilising at 0.5 times. "